The Okra Effect: Why Open Banking Innovators Struggle to Monetise

Open banking is an inevitable concept. Once financial data becomes portable, innovation thrives, new lenders emerge, risk pricing improves, and new fintech branches spring up. Theoretically, the people who build the pipelines that enable this innovation work with some of the safest conditions in the financial ecosystem. However, those pipelines are often the most difficult businesses to make profitable.

We call this paradox the Startup “Okra” Effect: companies that offer the most crucial financial infrastructure in emerging markets also tend to find it most challenging to reap the long-term benefits of that infrastructure.

Plaid vs. Okra: When Regulation Is the Product

In the United States and Europe, open banking is a regulatory requirement. Banks have a mandate to provide customer-sanctioned information in accordance with the European Union's Revised Payment Services Directive (PSD2). In the UK, the Open Banking Implementation Entity (OBIE) enforced interoperability from day one.

Such a regulatory environment enabled companies such as Plaid to grow under relatively predictable economic conditions. For Plaid, the main issue was improving the developer experience and abstraction, not whether systems were dependable or whether a bank connection would silently break.

African open banking innovators had to work with radically different conditions. When Okra arrived on the market, there was no PSD2 counterpart. Banks revealed either inadequate application programming interfaces (APIs) or none. Numerous links relied on workarounds that were more akin to reverse-engineered access than to standardised data sharing. The regulation did not ensure reliability, leading to multiple design iterations.

Nigeria has improved significantly. In 2023, the Central Bank of Nigeria published an open banking regulatory framework and operational principles that formally defined the roles of API providers and consumers, and specified security requirements. However, paper regulation does not necessarily imply uniform implementation. Until it does, open banking providers will continue to absorb systemic fragility.

Infrastructure Paradox: Low Pricing, High Utility

Open banking APIs sit in a dangerous economic zone. They are indispensable, but they don’t get used often enough to justify high margins naturally. Bank statement retrieval, account verification, and identity confirmation are mission-critical in lending, payroll, and payments. Yet for most end users, these actions are performed only once during onboarding and, at best, again at renewal.

They are not used continuously, which creates a pricing ceiling. Customers want these services to be low-cost, but the hidden cost structure indicates otherwise.

The dozens of live bank integrations require constant monitoring, rapid response, engineering to remediate silent failures, customer support to resolve issues and patch data inconsistencies, and incremental increases in security and compliance requirements as the platform scales.

A paper by the Consultative Group to Assist the Poor (CGAP) on open banking in emerging markets reveals that non-standardised access methods introduce reliability and operational risks to infrastructure providers, which they must bear. Now add competition. When multiple providers offer “bank statements and verification,” buyers aggressively push down pricing. The result is a race to the bottom on price, while costs remain stubbornly fixed. The volume alone can hardly save the model unless adoption is massive and stable.

The essence of Catch-22 is this: the more valuable any infrastructure becomes, the more difficult it is to charge for it.

The Nebula Pivot: The FX Escape Attempt

Another structural pressure unrelated to product-market fit in Okra by 2024 was currency risk. Like most infrastructure startups, Okra used dollar-based cloud services from hyperscalers such as Amazon Web Services and Microsoft Azure. Even as cloud bill usage did not increase, local currency bills swelled as the Naira continued to fall.

In October 2024, Okra released Nebula, a cloud services offering priced in naira as a local competitive alternative to USD-based hyperscalers. The reasoning was simple: if foreign-exchange volatility was eroding margins across the ecosystem, Nebula could localise infrastructure. Nebula was a logical reaction to macroeconomic reality. Instead of absorbing the FX risk, Okra sought to sell protection against it.

The question of whether the pivot can overcome the realities of capital intensity and time constraints in cloud infrastructure remains open. The important thing is what it signalled: that open banking could no longer sustain the company's cost structure under prevailing conditions.

Lessons in Integrity

It was not the struggle that made Okra unique, but rather the way in which it decided to exit.

In mid-2025, Techpoint reported that Okra was discontinuing its open banking business. The company repatriated idle cash to investors rather than depleting the remaining capital to extend its operations. The workers were offered systematised severance packages and bonus packages based on tenure.

In an ecosystem where shutdowns are often opaque, chaotic, or quietly buried, this was unusual. It reframed failure not as disappearance, but as governance.

The strategic implication is sobering, especially to founders. Not only is technical excellence required of infrastructure businesses, but regulatory alignment and pricing power are also required, which may be beyond a startup's control. It can serve as a reminder to investors that not all losses are the same; capital management is essential. For banks and regulators, this yields a single reality: without mandatory standards, the cost of open banking is borne by startups that are least able to afford it.

That is the Startup “Okra” Effect. The infrastructure works. Everyone uses it. However, the company that holds it together is likely the one to bear the strain.