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CGAP Partnerships Explore Impact of Open APIs on Financial Inclusion

CGAP Partnerships Explore Impact of Open APIs on Financial Inclusion

WASHINGTON, D.C., January 22, 2018 - How do you connect an emerging market's most innovative app developers and startups with digital financial services providers looking for new ways to reach poor customers? Open APIs are a proven way to connect these parties for mutual benefit, but they remain an unfamiliar concept in most emerging markets. To demonstrate their potential, CGAP today announces partnerships with five companies that are committed to opening their systems and data to third parties. 

Open APIs, or application programming interfaces, are mechanisms that enable software programs to “talk” to one another. Companies can productize open APIs, using them to sell access to data and systems to third parties. In the context of financial inclusion, digital financial services providers can use APIs to open their "digital rails" (i.e., payment systems and other financial infrastructure) to third parties, enabling these innovators to develop tools that leverage the provider's systems and data. In developed countries, major companies like U.S. retailer Walgreens offer API products to developers, and many popular digital services rely on APIs to function.

Open APIs have made some inroads in emerging markets. In countries like Kenya and India, startups are beginning to build on top of digital rails being opened up slowly by leading payments and mobile wallet providers. P2P micro-lending platforms, digital savings groups and new ways of purchasing essentials like solar panels are appearing. Still, more examples of what is possible are needed to inspire digital financial services providers. Providers face common obstacles when opening up their assets and capabilities via APIs. They also operate in specific markets with challenges of their own. 

Over the next two years, CGAP will explore the potential impact of opening up platforms to third parties through partnerships in Africa and Asia:

  • Barclays Africa: To foster a pan-African financial services marketplace that delivers banking as a service to all, including low-income households.
  • Wave Money, Myanmar: To enable FinTechs and others to easily incorporate seamless digital payment capabilities into their online businesses in a low-banked, high-smartphone penetration market.
  • Zoona, Zambia: To enable third parties to extend the number of reasons for customers and agents to use Zoona.
  • BTPN, Indonesia: To optimize their agent network and create new revenue streams using open API-enabled strategic partnerships.
  • MTN, Uganda: To drive customer growth and activity by facilitating a wider range of mobile wallet applications for all customers through open APIs.

CGAP will contribute technical and strategic expertise to each partnership and share lessons for the broader industry through its new open APIs newsletter and other resources. CGAP's work with these partners will focus on answering some of the key questions that face any digital financial services provider looking to open up their APIs:

  • What API products should be prioritized in an initial release?
  • How can providers rethink their digital processes to minimize time to market for third-party innovators without compromising on governance?
  • When working in emerging markets, what are the best developer engagement practices? What are the must-haves for creating an engaging, active developer portal that drives usage?
  • How can digital financial services providers generate new revenue streams with appropriate API pricing and business models? 

Michel Hanouch, lead for CGAP’s open API work, said: “We aren’t expecting a one-size-fits-all solution to these questions. These partners are at different stages of API maturity, operate in very different contexts, and have different objectives. In the end we hope that in supporting these businesses, we can ensure startups with creative ideas for financial inclusion can more easily bring their visions to reality in a way that benefits not just developers, but also providers and poor customers."

About CGAP

CGAP is an independent think tank that works to empower poor people to capture opportunities and build resilience through financial services. We test, learn and develop innovative solutions through practical research and active engagement with our partners on building responsible and inclusive financial systems that help move people out of poverty, protect their gains and advance global development goals. Housed at the World Bank, CGAP is supported by over 30 leading development organizations committed to making financial services meet the needs of poor people.