By: Agosu Omoleye
Long before the business landscape took a dramatic turn and processes became more defined and organized through modern innovations pervading the tech space, the word "fintech" or API rarely makes it into random business conversations.
There was a total reliance on the traditional business models which is often characterized by its shortcoming of time wastages, unnecessary bureaucracy, and general sloppiness in the business operations.
Technological awareness is spreading across the African continent in this new business dispensation. The global business climate is already feeling the impacts of tech startups across the African ecosystem with their innovative ideas.
As we celebrate the gains of tech advancement in the continent, some pundits are of the opinion that the API fintech is the next ground to break for tech players across Africa. The exploits of Onekiosk, kobo360, ComX, Paylink, and remita amongst other platforms in the digital finance space are indicators of the next big thing to happen on African soil.
Recently, OnePipe raised a sum of USD 950K from a mix of institutional and angel investors. Basically, OnePipe’s objective is to aggregate financial services, in the form of APIs, from banks and fintech into a standardized gateway for service providers.
In the technology startup context, when the word “bridge” or “connector” is being mentioned, API and likewise API fintech is one that should pop up since they mean the same thing in the tech world.
API is an acronym for “Application Programming Interface,”. It is a computer interface that determines the interactions between multiple software intermediaries. In essence, API allows interaction among programs.
Significant growth has been recorded for the API industry on a global scale so far, according to GSM Association (GSMA) report titled “Bridging Mobile Operators and Startups in Emerging Markets,” it was estimated that as of 2006, less than 400 public APIs were globally available.
Going further, one notion that needs to be cleared is that APIs do not only relate to fintech. Its importance transcends the financial industry, as there also exist telecommunication APIs alongside others. However, APIs for the fintech industry is one of the fastest-growing use cases for APIs.
One instance is the online purchases and payments made on e-commerce platforms which are a part of the goodness that has been made possible by the use of APIs.
The broader term, API fintech, on the other hand, performs the function of aggregating a host of APIs into one, thereby providing an infrastructure-based service. What API Fintechs offer is what can be labeled “fintech-as-a-service.”
The evolution of API fintech in Nigeria
can be likened to that of the United States of America, as significant similarities can be sighted between both. A little dive into the events between both countries, Yes?
In the United States, the API fintech space can be traced to the advent of payment facilitators or gateways. Payment APIs like Stripe was birthed when the gaps in the USA’s financial infrastructure became worrisome. These payment APIs emerged to fill those gaps and they translated into the financial inclusion we are currently experiencing across board.
Stripe’s launch in 2010 was followed by the Visa-acquired Plaid, which launched in 2013. Plaid leverages fintech APIs to connect applications with users’ bank accounts.
Plaid’s objective and mission is similar to that of the African API fintech startup, Okra. More so, Okra said in an interview with Forbes that it is building the “Plaid for Africa.”
API Fintech trend of the United States seems to mirror what is playing out in Nigeria. In simple terms, the trend in Nigeria followed the same pattern which began from the advent of payment processors/APIs like Paystack and Flutterwave, and now to the three purely API fintechs that have launched this year.
A prominent factor that sparked the adoption of API in the Nigerian financial sector is the increasing advocacy of open banking in Nigeria.
The value proposition of open banking is the communication between API fintech and banks. In an ideal situation, open banking provides banks and fintech with customer insight and financial innovation via an API ecosystem.
In recent times, there has been a more deliberate collaborative effort between banks and fintech. A typical example is a synergy existing between platforms like remita and commercial banks.
It can therefore be said that open banking advocacy in Nigeria has contributed immensely to the progress API fintechs have made in the country so far.
The absence of such collaborations in other African countries is one of the factors Nigeria is finding turf in the financial sector, leaving other African nations behind.
API fintech space obviously is the next big thing for the African financial sector but interestingly enough, majorly playing in this space are Nigerian startups trailing the blaze while leaving the rest of Africa out of the equation.
Comments
Post a Comment