The Middle East and Africa open API market size was valued at USD 42 million in 2022 and is projected to reach USD 111 million by 2031, registering a CAGR of 10.8% % during the forecast period (2023-2031).
API stands for application programming interface and is an essential component of software developers' technology. It is also commonly known as a public API or open-source technology, but open-source technology and an open API are distinct. The interface component of an API is a system that enables two or more software programs to communicate and interact without encountering any communication issues.
Open Application Programming Interface (API) or external API is a form of Application Programming Interface (API) readily accessible to third-party developers or with limited restrictions. Open API assists developers in integrating APIs with open-source data and associated services for application development. Notable end-users of the open API include the IT and telecommunications industry, banking, financial services, insurance (BFSI), and healthcare. It is also acquiring prominence in the travel and tourism sector, government and education, media and entertainment, energy and utility, and the media and entertainment industry. The Open API is designed to be readily accessible to third-party developers.
According to data released by insiderintelligence.com, the e-commerce industry has experienced exponential development over the past few decades. In 2022, the global e-commerce market was anticipated to tally USD 5.7 trillion. This number is anticipated to rise over the next few years, demonstrating the increasing success of borderless e-commerce for online retailers. In 2017, online purchases accounted for only 17.8% of total sales, a percentage that is projected to increase by 3% to 20.8% by 2023. In addition, it is anticipated that growth will continue, reaching 23% by 2025, a 5.2-percentage point increase in just five years.
The uncertainty and security vulnerabilities of third-party applications are among the most significant restraints on the global application programming interface market. Since third-party developers now have access to the company's API, the threat levels and opportunities for cybercriminals to exploit banking systems and online payment vulnerabilities have increased. The APIs that communicate with back-end systems and transmit data contain inherent flaws. In addition, their constant Internet use makes them simple to investigate. Insecure web browsers also leave the API and UI vulnerable to attack.
The open banking, IT and telecom, and retail sectors have created a tremendously lucrative opportunity for open API usage. In 2021, Omdia surveyed payment issuers/acquirers about their organization's attitudes and plans regarding real-time payments and the creation of open APIs; more than 70% of respondents agreed that they view third-party developers and third-party providers (TPPs) as a new customer base and that their organization has a clear strategy regarding open APIs. This is a positive development, but providers are nearly equally likely to be concerned about the security of alternative payments. More than sixty percent of respondents are concerned about the security of open APIs, likely due to rising data protection regulations.
The need for data management and operations transparency is increasing in the contemporary digital era. This circumstance has created an urgent need for real-time payment systems and technology. This model no longer exists. Previously, the FTP server converted transactional data into batch files for sharing and access. Consequently, there is a rising demand for a public API that serves as a foundation for real-time data exchange. BBVA, for example, is a leader in this field because it has effectively published its entire banking infrastructure on the Internet so that other companies can innovate. This change reflects the software industry's broader shift from products to platforms, which enables problems to be solved more quickly, efficiently, and comprehensively.
Companies worldwide exert additional effort to comprehend customer needs and efficiently meet them. With the increasing intensity of competition in all industries, both large and small and medium-sized enterprises (SMEs) are attempting to assess consumer needs and meet them accordingly. In addition, the growing number of third-party mobile applications is a major factor propelling the growth of the Open API Market over the forecast period. SaaS and hybrid cloud-based API deployments are increasing.
The Middle East and Africa open API market is segmented based on product and application.
Based on product, the open API market is segmented into– Web API, Local API, and Program API.
The web API dominates the market and is expected to grow at a CAGR of 11.3% during the forecast period.
Based on application, the open API market is segmented into– BFSI, government, media and entertainment, IT and telecom, healthcare and life science, and others.
BFSI dominated the market and is expected to register a CAGR of 11.9% over the forecast period.
The Middle East and Africa open API market is segmented based on the country into South Arabia, South Africa, Kuwait, and the Rest of the Middle East and Africa. South Arabia dominates the market and is expected the expand at a CAGR of 10.5% during the forecast period.
Although the sector is expanding slowly in Africa, regulators and institutions are becoming more receptive to sharing consumer data with fintech companies. Open banking, this novel concept, is typically described as a game-changer by fintech experts and payment executives because it enables greater convenience and customization in the delivery of banking services.
African FinTech firms have expanded their services throughout the continent due to increased investment. The potential is tremendous, especially in sub-Saharan Africa, a region traditionally with limited access to financial services. Nigeria, the continent's largest economy with a population of nearly 210 million, garnered over 60 percent of Africa's inbound FinTech investment in 2021. Still, over fifty percent of Nigerians lack a bank account.
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