Standard Bank has come out in defence of a market-led approach to open banking in South Africa that the Reserve Bank recently criticised, while the fintech industry is calling for more regulation.
In March, the Reserve Bank released a working paper (PDF) arguing that South Africa’s market-driven approach to open banking has been limited in its reach and risks entrenching the very economic barriers that have locked large sections of the population out of the financial system.
Open banking allows users to share their banking information – or relevant portions of it – between financial institutions to make it easier to access financial products and services. In South Africa, it has helped drive financial inclusion by allowing fintechs such as Yoco, Lulalend and MTN’s MoMo to use banking data to build products and services for previously underserved portions of the population.
“While we agree that regulator-led open banking approaches can accelerate industry adoption, Standard Bank’s view is that a commercial or market-led approach can drive meaningful progress, innovation and client-focused solutions,” said Simon Just, head of payments in the chief operating officer’s office at Standard Bank Group.
“A tangible example is Standard Bank’s PayShap API solution for disbursements and collections, which allows clients to initiate payments in their own channels, all based on work with leading clients in the industry and their emerging needs and requirements.”
The Association of South African Payment Providers (Asapp), a fintech industry body whose members include Altron Fintech, Hello Group, iKhokha, Peach Payments and Lesaka Technologies, sees regulatory intervention – so long as it is measured and not heavy-handed – as key to plugging gaps that the market-led approach has failed to address.
Limitations
According to Asapp president Lincoln Mali, a purely market-led approach to open banking has its limitations, particularly in a complex and unevenly developed market like South Africa.
“While market-led innovation has driven important progress, it has also resulted in fragmentation, inconsistent standards and uneven levels of participation,” Mali said. “Asapp supports a more coordinated approach, where regulatory leadership provides clear direction, minimum standards and governance frameworks, while still enabling innovation and competition. A balanced model – combining regulatory guidance with industry collaboration – is likely to be most effective in accelerating open banking outcomes.”
Read: Open banking is growing in South Africa – but not for everyone
APIs have served as an enabling technology for open banking by facilitating data sharing between banks, fintechs and users. Standard Bank’s PayShap API combines open banking principles with the drive towards rapid payments that the Reserve Bank hopes will speed up financial flows across the economy and boost economic activity.
According to Asapp, one of the pitfalls of a purely market-driven approach is that it has led to a fragmented API landscape characterised by proprietary implementations that encourage bilateral integrations instead of open solutions.
“This creates inefficiencies, increases costs and slows down the ability of new entrants to scale. The lack of universally adopted standards means that integration remains complex and resource-intensive, particularly for smaller fintechs. Greater standardisation would materially improve interoperability and reduce barriers to participation,” Mali said.
Where the banks see a role for regulation
There are areas where banks see regulation as an important governance tool for open banking. On API standards, Just said interoperability, security and industry-wide standards are “best developed through strong market collaboration and clear regulatory guidance”. But if data sharing is to be mandated through regulation, he said the same standards must apply across all relevant sectors – including telecommunications, retailers and government – not just banks and fintechs.
The Reserve Bank’s working paper warned that credit-focused open banking models could increase financial exclusion, another area where Just sees regulation potentially playing a role.
“Open banking can provide additional data points to enrich credit assessment. The practice, in and of itself, would not be the cause of any algorithmic bias. Levels of governance and regulation are required to ensure that all market participants comply with relevant regulation, perhaps with new regulation to govern the application of AI in credit provision,” Just said.
Should the Reserve Bank or another government entity choose to regulate open banking, Standard Bank said it would support “a structured opt-in model with clear and well-enforced standards that can create a level playing field for all participants”. Asapp sees regulation as more fundamental to open banking’s expansion but warned that it should be mindful of cost implications that may marginalise smaller players.
Read: Fintechs outpacing banks in South Africa’s informal economy
“Open banking represents a significant opportunity to modernise South Africa’s financial ecosystem, enhance competition and drive financial inclusion. However, its success will depend on clear governance, appropriate regulatory support and strong industry collaboration,” Mali said. – (c) 2026 NewsCentral Media
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