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The Kenyan Open Banking model
Kenya is adopting a regulatory-driven approach to open banking with a growing interest from both the public and private sectors.
In 2021, the Central Bank of Kenya (CBK) published its 2021-2025 Vision and Strategy document, outlining the future of the country’s digital payments ecosystem and highlighting the importance of open banking. This strategy was developed by benchmarking against countries like the UK and South Africa, which have advanced their payment infrastructures through open banking.
The core of Kenya’s open banking model revolves around secure data sharing between financial institutions and third-party providers, in line with the Data Protection Act of 2019. This Act ensures that financial data governance meets the specific needs of the industry, safeguarding consumer privacy while promoting innovation. Open banking is expected to transform how consumers access financial products and services, offering more personalized and competitive solutions.
Key stakeholders and initiatives in the open banking journey
Kenya’s open banking ecosystem is driven by multiple stakeholders, including regulators, traditional financial institutions, fintechs, and industry associations.
The Central Bank of Kenya (CBK)
As the leading regulator, the Central Bank of Kenya sets the rules and guidelines for secure data sharing and financial innovation. The 2021-2025 Vision and Strategy underscores the CBK’s role in promoting digital payments and open banking. While the regulatory framework is still in development, CBK is engaging with industry stakeholders to ensure a smooth and secure rollout of open banking.
Open Finance Initiative (OFI)
The Open Finance Initiative (OFI) is a collaboration between the Financial Sector Deepening (FSD) Kenya, the Kenya Bankers Association (KBA), and the Association of Fintechs in Kenya (AFIK). This initiative aims to drive innovation, competition, and financial inclusion by enabling secure data-sharing across providers. OFI is currently driving research into open finance implementation, identifying new business models, and developing policy proposals that will shape Kenya’s open banking future.
Current status and next steps
Kenya is currently in the development phase of its open banking journey. Several initiatives, such as the Open Finance Initiative (OFI) and partnerships between banks and fintechs, are already in place. However, there is a need for a comprehensive regulatory framework to govern the secure sharing of financial data between institutions and third-party providers. This framework will ensure that consumer privacy is protected while fostering innovation in the financial sector.
The CBK has committed to working with key stakeholders, including fintechs, payment processors, remittance providers, and the Kenya Bankers Association (KBA), to finalize open banking regulations. PesaLink and other digital payment platforms are also expected to play a central role in Kenya’s open banking system, enhancing the interoperability between banks and fintechs.
While Kenya’s innovators are at the forefront of digital financial services, there is growing concern that the country may fall behind if regulatory action is not taken soon. It is anticipated that Kenya’s open banking framework will be formalized by mid-2025, allowing for full-scale implementation.
Open Banking is a regulation and a set of guidelines from the Central Bank of Nigerian that stipulates that banks and CBN regulated entities must use the same API standard for interconnectivity. Furthermore, it provides operational guidelines regarding how customer data is shared, consents, security, etc.
Important Links
Open Banking Nigeria (Open Technology Foundation) is a non-profit backed by a group of industry experts across banking, fintech, risk management, and more to drive and launch the open banking standard in Nigeria.
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