Why African Banks and Fintechs Need Open Finance to Scale
David Peterside—co-founder and COO at Okra—was interviewed by The Paypers for the 2021 Open Banking Report. This article summarises insights from the chat.
David Peterside—co-founder and COO at Okra— was featured in the Open Banking Report 2021 to discuss the role of Open Finance in scaling operations for banks and fintechs in Africa. In this article, we summarise exciting points from his chat with The Paypers—publishers of the report. Below are David's answers to questions from the interview:
What's the Okra story?
"Fara—co-founder and CEO/CTO at Okra—realised there was no way to truly scale products with the technology that existed at the time (c. 2020) and started exploring bank integrations as a way to get through this hurdle. We spoke extensively about the potential and studied the business case much more profound. We quickly realised that the Open finance infrastructure was the most critical tool needed to open the fintech market on the continent, and our thesis directly aligned with our world view on the 4th industrial revolution."
What prevents Open Banking from succeeding in Nigeria?
"The limitation that we saw with the old Open Banking practices (besides the apparent multimillion-dollar cost for banks) was that it would have taken much longer to implement, as we learnt from the UK. We made it possible for the service to go live within a year instead of 5/6 years through our approach. We also felt the need to digitise all aspects of financial services beyond banking.
I'll argue that the growth opportunity here over the next 5-10 years will be much more exciting than on any other continent on the planet. This is why we believe our work in pioneering Open Finance for the African continent is instrumental."
What are the most promising use cases of Open Finance in Nigeria, both now and in 2022 or beyond?
"Open Finance is probably the most impactful development in the history of the financial services industry. One of the mind-blowing facts about this technological breakthrough around data transfer is that it significantly improves the quality of all financial products by order of magnitude.
When you think about what you use your banks or favourite fintech apps for, the use cases are:
- Payments — spending your money
- Wealth (savings & Investments) — growing your money
Where can businesses be more innovative as they leverage Okra's services?
"Onboarding, financial risk analysis, and payment collections, just to name a few. Businesses exist to solve problems by delivering quality services to customers. The company that does this the best, in most cases, becomes the most prominent business. Generally, the more technology (innovation) is applied to the delivery of these services, the bigger the scale of the business.
Businesses like banks and fintechs in Africa must think about technology first and embrace Open Finance tools that will enable them to compete now and in the long term. This is important because consumers are very unforgiving; we've seen it with the likes of Blockbuster, Motorola, Nokia, to name a few."
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