Nigeria Introduces Open Banking
The Central Bank of Nigeria (CBN) has issued operational guidelines for using and delivering open banking services in the country.
Open banking utilizes API technology to facilitate the sharing of financial information needed to create new financial products and services. Unlike traditional centralized management of financial data, it operates on a network of various financial institutions, allowing them to exchange information more effectively. Data exchange between financial institutions can only happen after a customer has consented to it.
In the guideline issued to participating institutions via a circular signed by Musa Jimoh, Director, Payments System Management Department on March 7, 2023, CBN said: “in furtherance of its mandate for the stability of the financial system and pursuant to its role in deepening the financial system hereby issues the Operational Guidelines for Open Banking in Nigeria”.
CBN stated that the “adoption of open banking in Nigeria will foster the sharing of customer-permissioned data between banks and third-party firms to enable the building of customer-focused products and services. It is aimed at enhancing efficiency, competition, and access to financial services in Nigeria”.
The Bank shall provide data oversight and governance for open banking information assets for participants in the open banking arrangement to ensure compliance with relevant legal and regulatory provisions.
According to the guidelines, any organisation that has data of customers which may be exchanged with other entities for the purpose of providing innovative financial services within Nigeria shall be eligible to participate in the Open Banking ecosystem. The ecosystem consists of API providers, API consumers and customers. CBN shall provide an Open Banking Registry containing details of all approved parties.