Open Banking: Are Banks Ready to Find Out What Their Competitive Advantage Really Is?
Open Banking: Are Banks Ready to Find Out What Their Competitive Advantage Really Is?
Ethel D. Cofie
The real test of Open Banking is success, not failure
This following on from lasts week piece on what exactly will make a bank. A bank in 2035
I have spent most of my career where financial infrastructure gets built. I worked on the deployment of mobile money at Vodafone Ghana. I have sat on boards where the technology agenda was, quietly, the strategy agenda. So when a new piece of infrastructure arrives, I have learned to ask a different question from the one in the project plan.
Across Africa, Open Banking and Open Finance are moving quickly from policy discussion to implementation. Ghana published its Draft Open Banking Directive in December 2024, completed a proof of concept in 2025, and is moving towards a pilot. Nigeria moved earlier, from its Open Banking Regulatory Framework in February 2021 to Operational Guidelines in March 2023.
Kenya is taking the broader Open Finance route: its National Financial Inclusion Strategy 2025–2028, launched in December 2025, commits to an Open Finance feasibility study, while the Central Bank’s Draft National Payment System Policy and Bill followed in September 2026. Different approaches, different timelines, but the direction is clear: for African banks, these questions are moving from theoretical to immediate.
Most of the readiness conversations I hear in boardrooms are about whether the bank can do it. Are the APIs built? Is consent managed? Is security sound? Will we satisfy the regulator?
Fair questions. But there is a more important and strategic one.
If Open Banking works exactly as intended, what advantage does it take away from your bank, and what advantage does it make more valuable?
Notice the premise. Not failure. Success.
Open Banking is not really about APIs. It is not about compliance or consent screens either. When it works, it can change who is able to see and use information that previously sat primarily inside one financial relationship: yours, with your customer.
So the strategic question is not simply technical. What happens to your bank’s advantage when that changes?
What Does a Bank Know That Its Competitors Don’t?
One source of incumbent banking advantage has historically been what the bank can see: transactions, balances, repayment behaviour, cash flows, product usage, and years of history and context accumulated one relationship at a time.
This is not a new observation. Banking research has long examined how repeated relationships allow lenders to accumulate information about borrowers that outsiders may not have, and how that informational advantage can affect competition, pricing and the value of the relationship.
In African markets, the same problem appears from another direction in the persistent difficulty many small businesses face in borrowing: thin files, informal income and lenders who cannot always see enough to price the risk confidently.
Open Banking changes part of this equation. But we need to be precise about what it actually moves.
With the customer’s consent, it can make some underlying customer information available beyond the institution in which it originated. It does not automatically move what the bank has learned to do with that information.
The models. The institutional experience. The judgement of a credit committee that has lived through difficult economic cycles. The accumulated knowledge of millions of relationships. The understanding of how a cocoa trader’s cash flow behaves in the lean season, or how a public-sector salary earner’s account changes when income is delayed.
None of that travels with an API call.
Anyone who has built a product on transaction data knows the gap between having the data and knowing what it means. It can be a wide gap. Sometimes it is the whole business.
How much of our information advantage comes from exclusive access to the customer’s information, and how much comes from what we have learned to do with it?
If the answer leans heavily towards access, Open Banking changes something important. If the advantage sits more deeply in what the institution has learned, greater openness may create a different set of opportunities.
In Africa, the bank was never the only one watching
This is where the African story stops being a copy of the European one.
A great deal of financially useful information on this continent already sits outside traditional banks. Mobile money is the obvious example. I watched it happen from the inside. Within a few years, a rich picture of how millions of people earned, spent, saved and sent money was being drawn on a phone, not in a branch.
Kenya showed what that could mean for lending. M-Shwari used M-Pesa and related customer information as part of credit assessment, demonstrating that financially useful signals could be generated outside a conventional bank relationship. In Ghana, the credit-information ecosystem is also broadening beyond the traditional loan book and incorporating alternative sources of information.
The regulatory routes differ. Nigeria has established an Open Banking framework and operational guidelines. Ghana is moving from proof of concept towards implementation. Kenya is exploring a broader Open Finance direction. South Africa is developing its own thinking on data sharing, competition and financial inclusion.
These are different models at different stages, and they should not be collapsed into a single African Open Banking journey. But across them sits a common strategic development: financially useful information is becoming capable of moving across more institutional boundaries.
Now bring it back to the bank.
If a bank’s information advantage was already partial in many African markets, Open Banking can work in more than one direction. Depending on the design of each regime, it may expose some information the bank holds while also giving the bank access to information it previously did not have.
The interesting question, then, is not simply what a bank loses. It is what the bank may finally be able to see.
Open Banking doesn’t eliminate competitive advantage. It changes what competitive advantage is made of.
If competitors can increasingly see some of what your bank can see, the useful question is not simply what you lose. It is what remains hard to copy.
The easy answer is analytics. Better models. AI.
I am not convinced that is enough. Those capabilities are spreading quickly and many can increasingly be bought, licensed or rented. If a capability is readily available to every serious competitor, it becomes harder to treat access to that capability alone as a durable advantage.
So we have to look harder at where scarcity moves.
Imagine several institutions can identify the same attractive borrower from broadly similar information. Where does the advantage sit?
Is it seeing the risk first? Understanding it better? Pricing it better? Having cheaper funding? Being willing to carry the risk? Or surviving being wrong?
Those are very different capabilities. They live in very different parts of a bank. Speed may live in technology. Understanding may live in credit. Pricing involves treasury and risk. Funding sits in the deposit franchise. Appetite reaches the boardroom. Survival ultimately depends on capital.
Open Banking may change the relative value of these capabilities. The strategic question is which ones become more important for a particular bank.
The same logic applies to the customer relationship. If several institutions can understand enough about a customer to identify what they might need, is the advantage knowing what to offer, or having the customer’s attention when the decision is made?
Knowledge may become more abundant. Attention may not.
Where does our own scarce capability actually sit? Not where the strategy deck says it sits. Where does it really sit?
The real change is in the economics, not the technology
Follow the money.
For much of banking history, a set of valuable activities could sit inside a single relationship: acquiring the customer, holding deposits, observing transactions, assessing credit, providing capital, distributing products and making the next offer.
Open Banking can allow more of those activities to be separated. Not all of them. Not overnight. But enough to make the economics worth examining.
If someone else finds the customer, understands the customer and decides what the customer needs, how much value is left in being the bank that provides the money?
If the salary lands with you but the customer goes somewhere else to decide what to do with it, what exactly do you own?
If somebody else owns the interface, originates the need and gets the first opportunity to make the next offer, are you still distributing financial services, or supplying them?
I want to be careful here. Supplying them may be an excellent business. Being the balance sheet behind somebody else’s distribution can produce attractive economics at scale. It is simply a different strategic position, and it should be chosen rather than stumbled into.
What is a banking customer worth if acquiring the customer no longer means acquiring their financial life?
There is a margin question here too. If competitors can increasingly see enough of your best customers to price for them, some of the informational advantage of incumbency may become less valuable. That does not mean Open Banking automatically compresses margins. It does mean banks should understand which parts of today’s economics depend on capabilities competitors struggle to reproduce and which depend partly on frictions that greater openness may reduce.
Which profits in your bank exist because you are genuinely better at something, and which exist because the market has historically made it difficult for somebody else to compete for them?
Switching costs, information gaps and the effort required to move a financial relationship can all affect competition. Open Banking is intended, among other things, to make customer-authorised movement and use of financial information easier.
If some of the friction protecting today’s economics reduces, where will tomorrow’s economics come from?
Scale still matters. Open Banking may reveal which kind.
Scale brings real advantages: deposits, capital, customer numbers, institutional experience, brand, corporate relationships, distribution and, for some institutions, a presence across many markets.
Open Banking does not simply threaten these advantages. It gives banks reason to examine which of them become more valuable and which become easier for competitors to work around.
If smaller competitors can increasingly access information that once required millions of customers and years of relationships to accumulate, which advantages of scale survive?
Does Open Banking reduce the value of having millions of customers, or increase the value of being able to learn across millions of customers?
Perhaps the important distinction is not simply between banks with large customer bases and banks with small ones, but between institutions that possess scale and institutions that know how to learn from it. Open Banking may tell us how valuable that distinction really is.
For pan-African groups, the question sharpens.
What is the value of operating across multiple African markets if the information and insight generated in those markets cannot create advantage across the group?
A footprint across many countries is not automatically an advantage. The strategic value appears when scale across markets can improve decisions, products, risk understanding, customer propositions or economics. Regulatory fragmentation complicates that, with different data regimes, scopes and rules across jurisdictions. That is a separate argument, but it matters to any bank trying to turn geography into advantage.
Being ready is not the same as knowing what you are ready for
A bank can be completely ready for Open Banking.
The APIs work. Security is addressed. Consent is in place. Compliance is satisfied.
Ready for what?
Technical readiness answers whether the bank can participate. Regulatory readiness answers whether it can participate compliantly. Neither necessarily tells you whether the bank understands how it intends to remain competitively advantaged as the market becomes more open.
That is the strategic question.
Open Banking doesn’t eliminate competitive advantage. It changes what competitive advantage is made of.
Which of our current advantages become less scarce in an Open Banking environment?
What becomes more valuable as a result?
If our competitors could see more of what we see tomorrow, what would still make us a better bank?