In 2017, a small group of fintech industry stakeholders started pushing a radical idea; what if Nigerian banks were required to share customer financial data (with consent) through secure digital channels? At the time, this sounded almost impossible. Banks were comfortable being the sole custodians of customer information, and the idea of allowing third parties to access that data felt like a threat, not an opportunity.
But these stakeholders didn’t let up. They formed working groups, published papers, and lobbied for what they saw as the future of financial services. By 2021, the Central Bank of Nigeria (CBN) started paying attention. Regulators saw the success of open banking in the UK and Europe and realized Nigeria couldn’t afford to be left behind. In 2023, the CBN finally issued the Operational Guidelines for Open Banking in Nigeria, making it official. Banks and fintechs now had a framework to exchange customer data securely.
With over 134 million active bank accounts, over 60 million BVNs, and a fintech sector that attracted more than $1.2 billion in investments in 2021, Nigeria’s financial ecosystem was ripe for this transformation. The goal? To give customers control over their data, encourage competition, and fuel innovation in lending, payments, and financial services.
At the center of this shift is the API standard, which dictates how institutions should share data in a structured and secure way. APIs have been around for years, but without a common standard, access to financial data has been messy and expensive. Now, a set of clear rules levels the playing field, allowing startups, banks, and even non-financial businesses to build better products for Nigerians.
What does Open Banking look like in practice?
Imagine a GTBank customer who also has an account with AccessBank. Before open banking, managing both accounts meant logging into different platforms, navigating separate apps, and dealing with multiple interfaces. Now, with open banking APIs, that same customer can log into GTBank’s app and not only view their GTBank account but also see their AccessBank balance. Even better, they can send money from their AccessBank account without leaving GTBank’s app.
Take another example; someone in need of a quick loan. They visit a digital lender like Irorun and grant it access to their financial data. With open banking APIs, Irorun can pull transaction history across multiple bank accounts, analyze income patterns, spending behavior, and net savings, and offer a personalized loan within minutes. If the customer asks for ₦1 million, Irorun can assess their creditworthiness in real time and disburse the loan with a repayment plan suited to their financial history.
All of this is made possible by the API standard set for open banking in Nigeria. But what exactly does this API standard entail? How does it affect banks, fintechs, and everyday users? And what challenges lie ahead in its adoption? Let’s break it all down.
Breaking down Nigeria’s Open Banking API standard
Nigeria’s open banking API standard is more than just another tech framework. It’s the foundation of a new financial ecosystem designed for inclusivity, competition, and innovation. Unlike traditional banking regulations that impose rigid structures, this standard is built with flexibility, collaboration, and local market needs at its core. Here’s what makes it truly unique:
Designed by the industry, for the industry
Most financial regulations follow a top-down approach, where policymakers dictate terms to banks and fintechs. Nigeria’s open banking standard flips this model. It was born out of industry collaboration, spearheaded by Open Banking Nigeria, an initiative that brought together banks, fintechs, and regulators to create a system that works for all stakeholders. The Central Bank of Nigeria (CBN) later formalized it, making it the national standard. This organic development process means the standard is practical, adaptable, and tailored to real-world financial needs.
Open and Non-Proprietary
Unlike proprietary banking systems controlled by a handful of institutions, Nigeria’s open banking API is publicly accessible and non-restrictive. Any financial institution, developer, or startup can access its specifications, integrate with it, and even contribute improvements. This openness fosters rapid innovation, allowing smaller players to compete with established banks while giving customers access to a broader range of financial products.
Built on global best Practices, Yet locally adapted
Nigeria’s open banking framework follows the RESTful API architecture, a globally recognized standard that ensures easy integration, high security, and scalability. However, it’s not a one-size-fits-all model. Unlike the ISO 20022 standard, which is widely used in Europe, Nigeria’s API has been customized to address the country’s specific banking infrastructure, regulatory requirements, and consumer behavior. This localized approach ensures a smooth transition for banks and fintechs while maintaining compatibility with international financial systems.
Continuously evolving with the industry
Financial services are constantly evolving, and so is Nigeria’s open banking API. It’s not a rigid set of rules, it’s a dynamic framework that undergoes continuous updates. As new financial products emerge and technology advances, the API standard will be revised to support more use cases, address security challenges, and incorporate industry feedback. This ensures long-term relevance and adaptability, preventing Nigeria’s open banking system from becoming outdated.
Covers a broad range of financial transactions
Open banking is not just about account aggregation or payments, it includes several financial functionalities that go beyond traditional banking services:
- Direct debit: Defines how financial institutions can implement automated direct debit transactions.
- Virtual accounts: Provides a standardized approach for managing virtual accounts through open banking.
- Card management: Offers APIs for secure access to card-related information, enabling customers to manage their cards within third-party apps.
Strengthening data privacy and security
With open banking comes the responsibility to protect customer data. Nigeria’s API framework is built on a strict customer consent model, ensuring that individuals have full control over who accesses their financial information. The Nigeria Data Protection Regulation (NDPR) sets clear guidelines on how financial data should be handled, ensuring that only authorized institutions can access it and even then, only with explicit customer permission. This reduces the risk of unauthorized data sharing, fraud, and privacy breaches.
Why does this matter?
Nigeria’s move toward a unified API standard in open banking isn’t just another regulatory update, it’s a shift that will redefine how financial services work.
For Banks: The days of holding onto customers simply because switching is a hassle are fading. With easy data-sharing, banks will have to earn loyalty through better products, competitive rates, and superior customer service. Those that don’t adapt will struggle to stay relevant.
For Fintechs: Getting access to banking data has always been a messy, expensive process. A standardized API removes those roadblocks, allowing startups to build and scale financial products faster. This means more innovation, more competition, and ultimately, better services for users.
For Consumers: This is about control and choice. Nigerians will no longer be stuck with financial institutions that don’t serve their needs. They’ll have the power to move their data, access tailored financial products, and demand better experiences, whether from banks, fintechs, or any other financial service provider.
What comes next?
While open banking in Nigeria is slowly coming to reality, its success depends on adoption, security, and continuous improvement. Financial institutions must be ready to understand and integrate these APIs effectively, fintechs need to build compelling use cases, and regulators must ensure compliance without stifling innovation.
Nigeria’s API standard for open banking is unlike any other in the world. It is built for the country’s unique financial realities. As it evolves, it will not only transform banking but also create new opportunities in lending, payments, and digital commerce. The question is no longer whether open banking will change Nigeria’s financial sector. The real question is: who will take full advantage of it?
