After years of waiting, Open Banking is no longer just a buzzword. It is now about to become a reality in Nigeria. For those who may be wondering, Open Banking is a transformative movement in the financial sector that is redefining how data and services are shared across institutions.
At its core, Open Banking enables secure, user-consented data sharing between banks and third-party providers like fintechs via Application Programming Interfaces (APIs). This unlocks innovation, promotes competition, enhances inclusivity, and improves customer experience.
But Open Banking is not just one thing. It’s an ecosystem built like a house with different pillars holding it up. These include regulations, stakeholders, and ecosystem platform,s all working together to make it a success.
Pillar 1: Regulation
Regulation is the primary backbone of Open Banking. It ensures that financial data is shared responsibly, securely, and with customer consent. In Nigeria, three major regulatory instruments form the legal foundation of this ecosystem:
- Data Privacy – Nigeria Data Protection Regulation (NDPR):
Issued by NITDA, not the Central Bank, the NDPR is Nigeria’s primary data protection law. It governs how personal data, including customer financial data, must be collected, stored, and shared. Open Banking participants are required to comply with its core principles: transparency, informed consent, data minimization, and security. This ensures that user data is protected, and trust is maintained.
- CBN Open Banking Regulation (2021):
This was the first formal framework introduced by the Central Bank of Nigeria (CBN) to recognize and guide Open Banking activities. It defines what Open Banking is, identifies the key players (API providers, consumers, and regulators), and outlines their roles, rights, and responsibilities.
- CBN Open Banking Operational Guidelines:
These guidelines provide the technical and operational blueprint for how Open Banking should be implemented. They cover areas such as API standards, data access and security protocols, customer consent processes, dispute resolution, and risk management. These detailed instructions help ensure consistency and compliance across the ecosystem.
Together, these three frameworks form a comprehensive regulatory structure that enables financial innovation, encourages competition, and protects the interests of consumers and institutions alike.
Pillar 2: Stakeholders
No matter how fancy the concept of Open Banking is, it wouldn’t work without its key players. These stakeholders each play a vital role in the success of the ecosystem:
- End-users (Individuals and Businesses):
These are the everyday people and companies, those with active bank accounts, who ultimately benefit from Open Banking. They want convenience, better financial tools, and more control over their financial data, and that’s what Open Banking offers them, with their explicit consent.
- API Providers (Banks & Licensed Financial Institutions):
These institutions provide access to financial data and services through APIs. They’re responsible for exposing relevant data (like account balances, transactions, etc.) in a secure and standardized way. This standardization is being provided by Open Banking Nigeria.
- API Consumers (Fintechs, Payment Platforms, Aggregators):
These are the tech platforms that consume APIs from banks to build innovative services, budgeting apps, loan platforms, payment solutions, etc. They offer customers better user experiences by connecting to multiple banks through one app.
- Regulator (Central Bank of Nigeria – CBN):
As previously mentioned, the CBN plays the crucial role of oversight, ensuring all participants adhere to the rules, maintain standards, and protect users. The regulator also monitors systemic risk and promotes fair competition among key providers. This stakeholder model encourages collaboration while ensuring that the user remains at the center of the experience.
Pillar 3: Ecosystem Platforms (Technology Infrastructure)
For Open Banking to function smoothly, it needs more than just regulations and willing stakeholders. It requires a robust technical infrastructure that ensures data can be shared securely, reliably, and in a standardized way. Nigeria’s Open Banking ecosystem rests on several foundational components:
- Central Registry (CC Registry)
The Central Registry is a centralized database that maintains a record of all registered participants in the Open Banking ecosystem, including banks, fintechs, API providers, and consumers. This registry helps ensure transparency, traceability, and trust across the ecosystem.
Currently, the Central Bank of Nigeria (CBN) is expected to operate this registry.
- Consent Management Systems
At the core of Open Banking is user consent. Without this consent, data can never be shared. Every participating institution must implement a Consent Management System that allows users to grant, manage, and withdraw permission for their data to be shared with third parties. For this to work out, some of the requirements include the following:
- Consent must be explicit, traceable, and revocable
- Systems must comply with NDPR and follow global best practices for privacy
- Records of consent must be auditable and tamper-proof
- Consent platforms are essential to maintaining customer trust and legal compliance.
- API Gateways
These API Gateways are the technical bridges that allow licensed third parties who are listed in the Central Registry (e.g., fintechs) to access financial data and services in real time. Each financial institution participating in Open Banking is required to set up an API Gateway that meets the standards defined by the CBN and specified by Open Banking NIgeria.
- Security and Standards Compliance
To keep the ecosystem secure, all platforms must follow CBN-approved API standards and implement rigorous security controls. This includes: cybersecurity frameworks aligned with industry best practices, fraud prevention and anomaly detection systems, data protection measures aligned with NDPR, and regular compliance audits. If at any point, consumer data is leaked or exposed, the entire aim of Open Banking’s consent management system is brought to naught.
The groundwork is being laid, but the success of the entire system will depend on collaboration, standardization, and trust.
With these platforms in place, Nigeria is laying the foundation for a robust and scalable Open Banking ecosystem.
Open Banking is not just for the banks or fintechs; it’s for everyone. Whether you’re a developer, a business owner, a tech enthusiast, or just an everyday user who wants more control over your financial life, Open Banking offers benefits like better access to credit services, seamless payment experiences, custom-tailored financial products and services, easier financial management tools, and overall, greater financial inclusion
Open Banking in Nigeria is still in its early stages, but progress is steady. The collaboration between CBN, banks, fintechs, and users is shaping a future where financial services are more open, inclusive, and innovative.
Over time, the system will continually improve as platforms mature, APIs become more standardised, and trust is built across the ecosystem.
