The Central Bank of Nigeria (CBN) has given approval for the operation of Open Banking in Nigeria.
Open Banking in Nigeria refers to data sharing across the banking and payment systems in the country.
According to the guideline establishing Open Banking, the idea behind the initiative “is to promote innovations and broaden the range of financial products and services available to bank customers”.
The CBN, in its guideline, said: “Open banking recognises the ownership and control of data by customers of financial and non-financial services”.
It also recognises the right of the customer “to grant authorisations to service providers for the purpose of accessing innovative financial products and services”.
Open Banking can be used to access customers’ information in relation to Agency Banking, Financial Inclusion, Know Your Customer (KYC), credit scoring/rating etc.
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The CBN said the guidelines are anticipated to drive competition and improve accessibility to financial and payments services.
Specifically, the CBN has warned participants in Open Banking to “adhere strictly to security standards when accessing and storing data, and to observe minimum privacy, operational, customer experience and risk management standards as prescribed by the Bank”.
With regards to those that will operate in the Open Banking ecosystem, the CBN has identified “any organisation that has data of customers which may be exchanged with other entities for the purpose of providing innovative financial services within Nigeria.
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“Entities participating in Open Banking are categorised into two. They: API Provider (AP): this refers to a participant that uses Application Programming Interface (API) to avail data or service to another participant.’’
An API Provider can be a licensed financial institution/service provider, a Fast-Moving Consumer Goods (FMCG) Company or other retailers, Payroll Service Bureau etc.