3 Ways Open Finance can Boost Financial Inclusion

Introduction

As financial technology advances in Africa, it’s important to look at financial inclusion as a metric of our journey towards a better Africa. As the rise of fintech startups has accelerated financial inclusion among unbanked and underbanked groups, open finance provides an opportunity to build value-added services further - helping people save, invest and manage their finances better. Here are 3 ways in which open finance will help drive and cement the strides financial inclusion efforts have made.

Access to Responsible Credit

One of the fastest growing industries over the past decade in the sub-Saharan African region has been lending. With services across the continent providing easy to access loans through mobile applications, there has been a dramatic uptake of micro-loans with a 1300% growth over the period of 2002 to 2012.

However, one of the grand challenges is the increasing risk of individuals accruing bad debt over time. The need for better data tools to help ensure individuals have access to safe and responsible loans is more real than ever. Okra seeks to solve this challenge through our core data products - Income, Balance and Transactions - help lenders better understand their user base and increase the chances of loan repayment and provide accurate credit scoring.

Encouraging Better Financial Health

As more Africans gain access to financial services, a key component becomes how users are able to manage their finances. By better understanding users’ spending patterns, financial services providers are able to provide key insights. This keeps users in check with their expenditure and helps them make better decisions that improve their financial health.

Okra’s Spending Patterns API provides financial services providers with the key data insights they need to create solutions for their end users.

Creating Opportunities for MSEs

Micro and small enterprises often struggle with access to credit despite consistent cash flow hampering their ability to grow. With Open Finance, their financial activity can be tracked across the various wallets and accounts they hold and this data can provide access to credit, helping these businesses access the credit they need to advance and grow their businesses.

With Okra’s Balance, Identity, Spending Patterns and Income allow credit providers to gain visibility into business operations and cashflows.

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References

https://www.un.org/africarenewal/magazine/august-2015/microfinance-good-poor

https://www.fintechfutures.com/2022/01/open-banking-a-new-stage-in-financial-inclusion/