Open Banking: The Path to Financial Globalization and Inclusion

The vision for open finance is clear: a globalized financial system that enables an immediate, always available, real time, cross-border payments network. This network will traverse sectors and provide its users with unique financial transparency.

Open finance is the natural next step from open banking, and it has the potential to expand from individual leading countries like the UK and Australia to the rest of the world. However, there are multiple hurdles in achieving this.

First, national payment network solutions struggle to integrate across jurisdictions due to incompatible banking systems and legislative and cultural differences.

In many countries, especially with large proportions of unbanked and underbanked people, there is often an attitude that it's a privilege to have a bank account, meaning banks successfully resist the escalation of services enabled by open banking reform. South Africa is a good example of this – it only has three banks of any real scale, which means the pool of players is too concentrated to encourage open competition.

To enable open finance infrastructure across borders, the regionalization and globalization of these networks will require either legislative harmony or serious customization across the network.

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For more information about embedded finance, read EPAM’s latest white paper: Navigating the Journey from Retailer to FinTech.