Open Banking and the API Economy: What's Actually Working
Open banking has been one of the most discussed topics in fintech for years. The promise was simple: banks open their APIs, third parties build innovative services, and consumers benefit from better financial products. The reality, as I — Myles Ndlovu — have seen building in this space, is more nuanced. Some things are working brilliantly. Others remain stubbornly difficult.
What’s Actually Working
Payment initiation services are the clearest success story of open banking. The ability to initiate a bank transfer directly from a third-party application — without the customer needing to log into their banking app separately — has enabled pay-by-bank payment flows that are genuinely better than card payments for many use cases.
Account aggregation is another area where open banking delivers clear value. Consumers can see all their financial accounts in a single dashboard, and fintech applications can use this data to provide personalised financial advice, automated budgeting, and credit scoring based on actual transaction history rather than traditional credit bureau data.
Where It’s Still Difficult
Bank API quality varies enormously. Some banks provide well-documented, reliable APIs with good uptime and consistent data formats. Others provide APIs that barely work, with poor documentation, frequent downtime, and data inconsistencies that require extensive normalisation work on the fintech side.
This quality gap creates a significant engineering burden for companies building on open banking infrastructure. You end up building bank-specific adapters, handling edge cases for each institution, and maintaining a compatibility layer that accounts for the differences between how each bank implements the same specification.
The African Context
Open banking in Africa is at a different stage than in Europe or the UK. Few African countries have mandated open banking through regulation, but the practical reality of API-based financial services is already well established through mobile money operators and fintech platforms.
In markets like South Africa, Nigeria, and Kenya, the challenge isn’t regulatory mandates — it’s building the commercial incentives for banks to open their APIs. Banks that see fintech companies as competitors are reluctant to provide API access. Banks that see them as distribution channels are more willing to collaborate.
Building the Aggregation Layer
The technical heart of open banking is the aggregation layer — the middleware that connects to multiple bank APIs and presents a unified interface to consumer-facing applications. Building this layer is one of the most complex integration challenges in fintech.
Each bank connection requires handling different authentication flows (OAuth, certificate-based, API keys), different data formats (ISO 20022, proprietary JSON, XML), and different error handling patterns. The aggregation layer must normalise all of this into a consistent API that application developers can build against without worrying about bank-specific quirks.
Consent Management
Open banking is built on user consent — customers must explicitly authorise third-party access to their financial data. Managing this consent lifecycle is both a regulatory requirement and a user experience challenge.
Consent must be specific (what data is shared), time-bound (for how long), and revocable (the customer can withdraw consent at any time). Building consent management systems that meet regulatory requirements while maintaining a smooth user experience requires careful UX design and robust backend systems for consent tracking and enforcement.
The Business Model Question
One of the ongoing challenges of open banking is finding sustainable business models. Payment initiation generates clear revenue through transaction fees. Account aggregation is harder to monetise — consumers expect free access to their own data, and the value lies in the services built on top of aggregated data rather than the aggregation itself.
The companies succeeding in open banking are the ones that use bank APIs as infrastructure for higher-value services: lending decisions based on transaction data, personalised insurance products, automated tax filing, and embedded finance integrations.
What Comes Next
The next phase of open banking extends beyond accounts and payments. Open finance encompasses insurance, investments, pensions, and lending data. Open data extends further still, into non-financial data sharing for utilities, telecoms, and government services.
For builders in this space, the opportunity is enormous. The technical foundations laid by open banking — standardised APIs, consent-based data sharing, secure authentication — apply to any domain where consumers should have control over their data and the ability to share it with services that create value for them.
Myles Ndlovu builds algorithmic trading engines, crypto platforms, and payment infrastructure for emerging markets. Read more about Myles or get in touch.