How Leveraging Embedded Finance and API Technology Can Catalyse Economic Growth Across Africa

  • Tatenda Furusa, Co-Founder and CEO at ImaliPay

  • 24.03.2023 02:00 pm
  • #embeddedfinance #api

Embedded finance has seen a rise in popularity in recent years as a result of the rapidly evolving technological landscape, leading to huge opportunities for business growth in the African market. Embedded finance offers a whole host of benefits and has made accessing financial products and services much easier for businesses and individuals, and now, the number of non-financial firms that offer these services is on the rise. 

According to research, around 400 million people living in Africa do not have access to digital financial services. In an increasingly digital world, this figure is alarmingly high making it harder for those individuals to save, borrow or send money, as well those wishing to start a business, in comparison to those who do have access. 

The World Economic Forum recently released a study highlighting that financial inclusion could help to lift millions out of poverty, which in turn would promote business and economic growth.

The emergence of Embedded Finance

Due to the nature of its offerings, embedded finance is often referred to as "invisible finance" Embedded finance is growing in popularity as consumer acceptance of and demand for innovative financial products increases.

Incorporating financial products into an easily accessible platform eliminates the need for consumers to interact directly with traditional banks and financial institutions. This can take the form of digital wallets or customer loyalty apps, enhancing the customer experience by providing an easy-to-use financial extension of a nonfinancial experience.

Embedded finance provides benefits for all parties, allowing customers to access products that meet their financial needs in a single location, with the click of a button, while giving businesses the chance to increase revenue, improve stickiness, reduce costs, and build long-term customer loyalty.

API Infrastructure tied to Banking as a Service 

BaaS is an end-to-end model that allows digital banks and other third parties to connect with banks' systems directly via APIs so they can build banking offerings on top of the providers' regulated infrastructure, as well as unlock the open banking opportunity reshaping the global financial services landscape.

API infrastructure makes embedded finance possible, fuelling the products and services that are offered to digital businesses. Low-code APIs simplify the addition of new interactions and leave the complexities of blended models to the API provider. 

When looking at African infrastructure, an issue that arises is that our economies are very fragmented and disparate. For Pan African companies trying to navigate the continent, it becomes harder to layer on bespoke services per each country and at scale.

This is where embedded finance and API infrastructures come into play, by facilitating access to various financial products and services. This can host many benefits to various markets including gig economy, e-commerce, retail, financial institutions and many more. 

ImaliPay, for example, uses API infrastructure to improve a business’s operational efficiency, engagement and powers new revenue growth. Services such as:

  • Omni-Channel Experience

  • Ledgers-as-a-service 

  • Auto-reconciliation 

  • Payments

  • Loan management systems

Accelerate your Fintech journey, “Why Build when you can Buy”?

Embedded finance is the next iteration of Fintech. It can help to solve some of the most challenging financial obstacles in the African market, for both businesses and their end customers.

Building a marketplace, platform, or digital business on the African continent is notoriously difficult. Typical obstacles include navigating regulation, finding the right technical talent, securing adequate funding, and ensuring reliable connectivity. By embracing the spirit of collaboration, co-creation, and innovation, and utilising plug-and-play API tools, founders, executives, or technology leaders will be able to accelerate development and reduce costs and time, enabling them to concentrate on their core business and scale up plans.

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