Open APIs

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CGAP’s open APIs work covers the business and technical aspects that DFS providers will need to consider when embarking on an open API program:

Across Africa, East Asia, South Asia, and Latin America, the digital financial services (DFS) industry is evolving steadily. In many countries, the number of innovative start-ups and app developers eager to launch services for low-income market segments is growing. Yet without access to established payments providers’ digital payments infrastructure and customer data (i.e., the “digital rails”), it is difficult for these innovators to turn their ideas into services for the people who need them.

DFS providers have great potential to build and share the digital rails that enable innovative third parties, like start-ups, app developers and existing businesses, to deliver a broader range of financial solutions for low-income people. Where available, digital rails are already making it possible for small businesses to manage cashless transactions by using mobile money platforms; for underbanked citizens to gain access to credit; for produce buyers to make faster, more secure payments to small-scale farmers; and for families to build their credit scores by paying for solar energy systems digitally.
Sharing the digital rails is made possible, in part, by application programming interfaces (APIs). In essence, an API is a contract that explains how a business can consume the capabilities and data of another system securely, without any risk of exposing systems to anyone without the agreed right to access. When a DFS provider offers open APIs, it allows third parties like FinTechs and other financial institutions to leverage payments functionality or data as part of other tools and services that target the same customers. DFS providers that allow access to their platforms via open APIs enable external developers to more easily build a range of solutions that are useful to low-income customers, at lower cost. These innovations could help reverse the global trend toward high rates of account inactivity.

For DFS providers, this type of collaboration creates stronger loyalty from existing customers who are able to access more services and products through their platforms. It also allows DFS providers to reach niche markets that may have been difficult to access previously and introduces new business models whereby providers can gain a revenue share from third-party providers building on their digital rails. For citizens, it increases access to a diverse range of financial services and support that will help them build wealth and reach their quality of life goals.

Open API Resources

CGAP works with industry to demonstrate how third parties can leverage the capabilities and assets of digital payment providers to deliver innovative financial solutions for low-income individuals. Helping providers transition toward open platforms by adopting open APIs will increase access to the digital rails, reduce the cost of integration for third parties, and accelerate the pace for innovation. Ultimately, this shift toward openness can benefit payments providers, third parties and customers alike.

CGAP is working closely with a handful of DFS providers who are demonstrating new ways to open APIs to help create solutions for financial inclusion. The learnings from these projects will be shared publicly to speed up replication and minimize missteps. A series of resources will also be released to help API product managers, technology leads, risk and compliance directors, DFS executives, and CEOs understand how to build their digital rails infrastructure and speed up innovation.

Contact: Michel Hanouch


18 April 2017
By opening up their payments platforms to third parties—such as financial technology companies, software developers, startups, and digital banks—providers can open the door to the development of innovative products that can be brought to market quickly.
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English (36 pages)

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