The Central Bank of Nigeria (CBN) has issued the operational guidelines for Open Banking in Nigeria thus becoming the first country to do this in the African continent.
According to Musa Jimoh, the Director payments Systems Management at CBN in a circular, the adoption of Open Banking in Nigeria will foster the sharing of customer-permitted data between banks and third-party firms to enable the building of customer focused products and services. It is also aimed at enhancing efficiency, competition and access to financial services in Nigeria.
What is Open Banking?
Open Banking is a system that provides third-party access to financial data through the use of application programming interfaces (APIs). This enables third-party developers to build applications and services around the financial institution.
Highlights of the Open Banking Guidelines
The Central Bank of Nigeria (CBN) shall provide and maintain an Open Banking Registry (OBR) for the industry.
The OBR shall be maintained for the following purposes:
- To provide regulatory oversight on participants
- To enhance transparency in the operations of Open Banking
- To ensure that only registered institutions operate within the open banking ecosystem.
The OBR shall be a public repository for details of registered participants. Each participant shall be identified by its CAC business registration number, which shall be the unique key across the OBR system.
The OBR shall maintain an API interface, defined within these guidelines, which shall serve as the primary means by which API providers manage the registration of their API consumers. OBR shall be a repository of APIs in the Open Banking Ecosystem.
The Objectives of Open Banking Operational Guidelines are as follows:
- Provide clear responsibilities and expectations for the various participant categories
- Ensure consistency and security across the open banking system
- Stipulate safeguards for financial system stability under an open banking regime
- Promote competition and enhances access to banking and other financial services
- Outline minimum requirements for participants.
The introduction of the guidelines is bound to bring about the revolution of financial products and services in the country. The Apex bank announced early this year that the regulatory sandbox is now live and thie
Open Banking Nigeria’s journey towards the final guideline release was a long one, starting with a group of industry financial services veterans led by Adedeji Olowe, who decided on June 1, 2017, that Nigeria needed to be at the forefront of payments innovation. This group formed an open banking working group, which eventually evolved into Open Banking Nigeria.
Subsequently, the CBN introduced the regulatory framework for open banking in Nigeria on February 7, 2021, which set the foundation for an industry committee to develop the operational guideline draft in May 2022. The finalized draft, which now serves as the rule for bankers and fintechs under CBN supervision, has been established as law.
The Open Banking regulation will be supported by the Nigeria Data Protection Regulation (NDPR) which was released in 2019 as data privacy is a foundational pillar for open banking.
This is yet another positive indication that the the Apex bank is promoting financial inclusion in the country. Early this year, it announced that the regulatory sandbox is now live.
