by Nigeria Becomes Africa’s Open Banking Regulation Pioneer
Nigeria, Africa’s biggest economy, has become the first country in the
continent to issue operational guidelines on open banking. The Central Bank of
Nigeria (CBN) in a circular released earlier
this week announced that it developed the open banking regulation in
partnership with industry stakeholders.
Open banking is a new practice that involves banks
sharing financial information with third-party providers (APIs) through
application programming interfaces to promote the development of innovative
products targeted at meeting consumer needs. The concept is gaining significant traction across the world.
The new guideline on open banking was released via a circular signed by Musa
Jimoh, the Director of the Payment System Management Department at the CBN. The circular was directed at deposit money banks, mobile money operators and
payment service providers in the country. The guidelines state the
principles for data sharing across Nigeria’s banking and payment
systems.
The document prescribes the minimum security standards that industry
stakeholders should follow when accessing and storing customer data. It also states the
minimum privacy, operational, customer experience and risk management standards
to be followed by banks and their third-party providers under the country’s
open banking regime.
The Nigerian apex banking authority in the circular
noted that the guidelines are targeted at “enhancing efficiency, competition
and access to financial services in Nigeria.”
“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,” Jimoh explained in the circular.
The Road to Open Banking Regulation in Nigeria
Open banking regulation in Nigeria dates back to 2017 when a group of
industry stakeholders formed the Open Banking Nigeria group. However, the CBN first stated interest in an open banking
system in 2018 when Jimoh noted that the banking authority was “looking at how to raise
the standard for all banks and fintech to plug in.”
Three years later, the CBN released a regulatory framework for open banking in
Nigeria. The framework was later developed into a draft of operational
guidelines in May 2022.
Commenting on the new regulation, Open Banking Nigeria noted
that the guidelines will be supported by the Nigeria Data Protection Regulation
(NDPR) which was released in 2009. “Data privacy is a foundation pillar for
open banking,” the group wrote in a blog post.
Nigeria, Africa’s biggest economy, has become the first country in the
continent to issue operational guidelines on open banking. The Central Bank of
Nigeria (CBN) in a circular released earlier
this week announced that it developed the open banking regulation in
partnership with industry stakeholders.
Open banking is a new practice that involves banks
sharing financial information with third-party providers (APIs) through
application programming interfaces to promote the development of innovative
products targeted at meeting consumer needs. The concept is gaining significant traction across the world.
The new guideline on open banking was released via a circular signed by Musa
Jimoh, the Director of the Payment System Management Department at the CBN. The circular was directed at deposit money banks, mobile money operators and
payment service providers in the country. The guidelines state the
principles for data sharing across Nigeria’s banking and payment
systems.
The document prescribes the minimum security standards that industry
stakeholders should follow when accessing and storing customer data. It also states the
minimum privacy, operational, customer experience and risk management standards
to be followed by banks and their third-party providers under the country’s
open banking regime.
The Nigerian apex banking authority in the circular
noted that the guidelines are targeted at “enhancing efficiency, competition
and access to financial services in Nigeria.”
“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,” Jimoh explained in the circular.
The Road to Open Banking Regulation in Nigeria
Open banking regulation in Nigeria dates back to 2017 when a group of
industry stakeholders formed the Open Banking Nigeria group. However, the CBN first stated interest in an open banking
system in 2018 when Jimoh noted that the banking authority was “looking at how to raise
the standard for all banks and fintech to plug in.”
Three years later, the CBN released a regulatory framework for open banking in
Nigeria. The framework was later developed into a draft of operational
guidelines in May 2022.
Commenting on the new regulation, Open Banking Nigeria noted
that the guidelines will be supported by the Nigeria Data Protection Regulation
(NDPR) which was released in 2009. “Data privacy is a foundation pillar for
open banking,” the group wrote in a blog post.