Senior financial sector specialist Stefan Staschen makes a strong case for open banking in emerging markets and why it would be important especially today in a COVID-19 world.
Open banking, he writes, could advance financial inclusion in emerging markets by dealing with some of the pain points related to spending, savings, and credit, usually experienced by low-income customers.
Already, research by CGAP finds that when firms can access customers’ financial data held by third parties, these firms create savings, credit, and financial management products that are better suited to poor people than those traditional banks have to offer.
Noting the limitations of smartphone ownership and availability of financial data in emerging countries, the author notes the importance of other types of digital data — whether social media activity, airtime purchases, or utility payments — that could also be leveraged by open banking regimes.
