Open banking refers to the use of Application Programming Interface (APIs) to exchange financial data and services with third parties.

Third parties often supply consumers of the bank with technology, a service, or an app that makes use of the shared financial data and services.

According to Ozow, open banking is causing a stir in the fast-paced world of finance, transforming how people interact with money and financial services.

This revolution is gaining traction in South Africa's thriving fintech landscape, fuelled by technical developments, legislative reforms, and changing customer behaviours.

The fintech company added that collaborative attitude, openness and trust are at the heart of this transition.

APIs create an infrastructure that allows for smooth data sharing between banks and third-party payment providers (TPPPs), opening up a world of possibilities for all parties involved.

The goal of open banking is to empower customers. It allows people to access and share their financial data with trustworthy partners, increasing competition and driving innovation in the industry.

Furthermore, it promises inclusion by providing a variety of financial services to individuals who have previously been neglected.

Sharing financial data has frequently been met with suspicion, owing to the contentious use of digital overlay (also known as screen scraping).

This strategy, which requires users to exchange their online banking login information with payment service providers, sparked security and privacy issues. South Africa, on the other hand, is shifting the narrative.

Ozow said that secured they $48 million in its Series B round and boasts over 8 million users. They are at the forefront of partnering with banks to transform the transaction process.

“Our core business ethos is to expedite processes by working directly with banks. It's the merging of resources that benefits the consumer the most. We've worked closely with Capitec on Capitec Pay and are currently in the proof-of-concept stage with several other leading banks to develop and deploy these groundbreaking APIs,” said Ozow's chief technology officer, Riaan Hanekom.

When APIs are not yet accessible, Ozow takes the usual way of employing a digital overlay.

This tried-and-true approach is still an efficient and secure way to conduct business. Ozow, on the other hand, is a pioneer in the usage of APIs, which provide a speedier path for sending money directly between banks.

The most important element to note is that both approaches offered by Ozow - digital overlay and APIs - provide excellent security protections. Regardless of the method utilised, Ozow ensures that all transactions are completed in a secure environment, giving clients confidence in the security of their financial transactions.

Looking ahead, the future of open banking in South Africa is bright, but there is still much work to be done. Banks must continue to recognise the possibilities of APIs and foster relationships with forward-thinking fintech start-ups.

Regulatory organisations must also create strong frameworks that protect consumers while stimulating competition and innovation.

The open banking revolution in South Africa will definitely continue to grow as time goes on, ushering in a new era of financial independence.

IOL

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The open banking revolution is ushering a new era of financial freedom in South Africa