API economy the next big opportunity for fintechs, banks in Africa
Some of the biggest hurdles facing fintechs, startups and banks in getting innovative applications to market are set to be overcome with the mainstreaming of open development platforms specifically for the financial sector.
This is according to Rudy Kawmi, head of Retail Banking Sales across Africa at Finastra, who was speaking ahead of a webinar on next-generation banking in SA.
Kawmi says while African fintechs are proliferating and banks are keen to innovate, there have been challenges in the way of getting great new innovations to market quickly and securely. For fintechs trying to take their new products to market, it can be challenging to engage with banks. “From a startup perspective, it can be hard to get a foot in the door with a big bank. Even if a fintech should have the ear of a big banking client, there are the hurdles of formal agreements, running proofs of concept and addressing concerns about security and licensing. These steps are time-consuming and difficult, and could take months or years before the fintech sees revenue. They often don’t have the resources to wait that long,” he says.
For banks, it can be equally challenging to innovate within the confines of stringent controls. “Proofs of concept, and legal and regulatory processes, can take a year or more. This flies in the face of agile methodology,” Kawmi says.
To overcome these challenges, the world is starting to move towards a collaborative approach to digital innovation in banking. “We’re seeing some vendors opening APIs to ease the tech burden; others also providing ecosystems of app stores. In many cases, these are essentially shopfronts generating a lead,” he says.
Seeing the need in the market, Finastra has gone further, providing comprehensive development platforms with developer support across the entire development life cycle, and an app marketplace providing banks with ready-built apps connected to existing Finastra products. Finastra’s FusionFabric.cloud fosters open collaboration within an ecosystem of development partners, opening Finastra’s core systems via APIs to all players in the financial services ecosystem – banks, fintechs, system integrators, independent developers, consultants and students.
The FusionFabric.cloud platform connects creators in the fintech industry with those who want to consume those services, with over 618 fintechs having joined the platform to date. More than 190 fintechs are active on the platform, with 23 apps in the store. Combined with Finastra’s retail banking core solution, Fusion Essence, it enables the quick extension of the bank’s ecosystem, providing new opportunities for revenue growth.
“Banks can innovate faster and more cost-effectively because we’ve done the security and penetration testing, so we already know it works. It’s been security cleared and there’s a commercial model in place,” he says.
This new open approach is shaking up the market worldwide, and heading to Africa too. “It’s quite a departure from what we used to do as a company – we used to be product-centric, and sell directly to banks. This is a significant shift towards open finance. It’s the most exciting thing about Finastra, it’s aligned to what a lot of our customers were starting to do, and it’s going to remove a lot of the friction and frustration,” says Kawmi.
Kawmi will outline the future of banking at the upcoming next-generation banking webinar, to be hosted in South Africa by Finastra, in partnership with ITWeb. The webinar will explore shifts in banking and opportunities presented by the convergence of multiple technologies, platforms and ecosystems, including cloud, open banking and digitalisation.
For more information and to register for this event, click here.