Ali Ghiyazuddin, Head of Policy Management, Policy Programs & Implementation, AFI

Anita is a vegetable vendor in Hyderabad, India, selling her goods in various farmer markets from her cart. In addition to her primary bank account, she has another account, where she receives government financial support as part of a small business support program. She also has a third account linked to a mobile wallet, to allow her to accept digital payments. 

Though Anita dreams of growing her business and opening a shop, she is unable to access credit, due to a lack of collateral and formal financial history.  

But consider a scenario where a fintech company – through Anita’s consent – could aggregate her transaction data across these accounts to build a comprehensive financial profile – enabling more accurate credit assessments, and opening up access to tailored financial and non-financial services. 

Whether it is a vegetable seller in India, a gig worker in Southeast Asia, a mobile money user in East Africa, or a mom & pop store in Latin America, open finance has the potential to drive financial inclusion by serving traditionally underserved populations—such as women, informal workers, and small entrepreneurs.

Open finance within the AFI network

A recent Alliance for Financial Inclusion member survey on Open Finance with 27 central banks and financial regulators in developing countries generated some interesting insight. Regarding the motivation for exploring open finance, respondents cited financial inclusion prominently, along with improving customer choice, innovation, competition, and consumer protection.

To support the growing interest among members, AFI’s Digital Financial Services Working Group (DFSWG) recently published a Policy Development & Implementation Guide for Inclusive Open Finance, which proposes an approach based on six pillars:

Open finance and consumer protection: regulatory examples

AFI members view consumer protection as a key issue in relation to inclusive open finance. Concerns include:

• Data breaches which could potentially lead to identity theft 
• Data misuse, where data obtained from customers is used beyond its intended purposes 
• Unauthorized payments 
• Digital exclusion – bad experiences will drive users away from digital financial services

AFI’s Policy Guide draws on experience and insight which is emerging across the developing world. One such example is Nigeria, the first African country to issue a regulatory framework on open banking – its implementation is expected to start in August 2025.

Nigeria’s framework prohibits anti-competitive practices among participants. This is to ensure a fair and transparent open banking ecosystem, where consumers can benefit from a variety of services and providers. It also requires participants to maintain transparency in their operations and provide regular reports to the Central Bank of Nigeria. 

In the Philippines, Bangko Sentral ng Pilipinas’ approach to open banking, currently in its pilot implementation phase, is holistic, with participation from stakeholders.  It focuses on consumer awareness related to safeguarding of information, fees and charges, risk disclosures, etc.  It also contains dispute resolution mechanisms, not just for customers but also among banks and other participants.  

Liability management among participants, as well as with customers, is a key issue for regulators. In South Africa, the Financial Sector Conduct Authority took a consultative approach, receiving inputs from a wide range of stakeholders. Their policy recommendations contain specific consumer protection aspects relating to risk and liability management frameworks, notably between financial institutions and third party providers.

In Brazil, competition and consumer protection forms a significant component in the key principles for implementing open banking. Principles worth highlighting relate to data quality and non-discriminatory treatment. 

Finally, in India, the account aggregator framework clearly defines the rights of customers and requirements of grievance redressal mechanisms, linking them to the integrated ombudsman scheme.  

Conclusion

Consumer protection must be a core pillar of any open finance framework, as opposed to an afterthought, especially in the interest of advancing financial inclusion.

For open finance to truly serve underserved groups such as women, informal workers, and micro-entrepreneurs, it must be built on strong safeguards around data privacy, informed consent, liability, and redress.