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Current Status of Open Banking
Nigeria is currently in the development phase of its open banking journey.
While the initial excitement surrounding the CBN’s regulatory framework was high, progress has been slower than anticipated, as open banking still remains a theory.
However, key players in the financial ecosystem—including traditional banks and fintechs—are ready and have already invested heavily in the technology required to power open banking. The country’s innovators are waiting for the final nod from the CBN and anticipate that this would happen in the first half of 2025.
Meanwhile, efforts to raise awareness of open banking’s potential benefits continue, as stakeholders hope this will spur the CBN to finalize the implementation process. The financial industry remains optimistic, viewing open banking as a game-changer for financial inclusion, innovation, and customer-centric banking services in Nigeria.
Open Banking Model
Nigeria has adopted a regulatory-driven open banking model.
In March 2021, the Central Bank of Nigeria (CBN) issued the Regulatory Framework for Open Banking in Nigeria, which laid the groundwork for the country’s journey towards open banking.
The guidelines were established to facilitate secure data sharing between banks and third-party providers (TPPs). This framework categorizes data and services into tiers with specific access requirements, promoting secure data sharing and enhancing the digital banking ecosystem.
The CBN’s open banking framework emphasizes customer data protection and transparency, ensuring that the financial services sector remains competitive and innovative while safeguarding consumer rights.
The Central Bank
The Central Bank of Nigeria (CBN) is the primary regulator of the financial sector in Nigeria and plays an important role in advancing open banking’s adoption. The CBN, through its Open Banking Regulation, has provided clear guidance on how financial data should be shared securely among authorized players in the ecosystem.
The CBN’s involvement ensures that open banking aligns with the broader goals of financial inclusion, consumer protection, and technological innovation. The bank enforces compliance through its licensing and supervisory roles, ensuring that all participating entities adhere to the regulatory framework.
Key Stakeholders in the Open Banking Journey
Spotlight: Critical stakeholders in the Nigerian open banking journey
Nigeria’s open banking journey is spearheaded by a coalition of proactive industry stakeholders advocating for greater transparency in the financial industry.
The Central Bank of Nigeria (CBN)
The CBN oversees the regulatory framework for open banking in Nigeria, ensuring that the implementation of open banking is safe, secure, and efficient. As the main regulatory body, the CBN sets the rules and guidelines that other stakeholders follow, focusing on consumer protection, data security, and financial inclusion.
Nigeria Inter-Bank Settlement System (NIBSS)
While the CBN oversees the entire regulatory framework, NIBSS is tasked with operationalizing the Open Banking Registry (OBR) and managing the Open Banking Consent Management System (OBCMS) on behalf of the industry. NIBSS is a shared-service e-payment infrastructure created by the CBN and Nigerian commercial banks to facilitate secure and efficient electronic payment systems. It plays a key role in ensuring that customer data is protected and that consent for data sharing is managed in line with the Nigeria Data Protection Regulation (NDPR).
Traditional financial institutions (API Providers)
Traditional banks play a significant role as API providers in Nigeria’s open banking ecosystem. These banks are key funders of the initiative, having invested heavily in the technology required to facilitate the adoption of open banking APIs. Through these APIs, they allow fintechs and other third-party providers to access customer data (with consent) and offer new services to enhance the customer experience. Some worthy mentions include Sterling Bank, Sparkle Bank, and Wema Bank, who are participating actively in this innovation.
Fintechs (API Consumers)
Leading fintech players such as Mono, OnePipe, and Lendsqr, stand as ardent advocates of open banking in Nigeria. These fintechs are eager to leverage open APIs provided by banks to develop tailored financial products and services that meet the needs of Nigerian consumers. They focus on providing innovative solutions in areas such as personal finance management, credit, and payment processing, fostering competition and financial inclusion in the industry.
Open Technology Foundation
Open Technology Foundation, primarily known as Open Banking Nigeria: a non-profit organization founded by a group of industry experts, with members cutting across 55+ banks, fintechs and consulting firms. OBN has worked directly with the CBN and other regulators to drive industry advocacy, develop and document the API standards for open banking in Nigeria. They have also collaborated with prominent financial institutions to develop an open source API gateway to streamline the adoption of open banking in Nigeria. In addition to these efforts, OBN promotes consumer education and open banking awareness through industry engagements and annual webinars.
Other notable stakeholders
The Committee of Banking Heads in Nigeria (CeBIH): A collaborative group of e-banking heads from various Nigerian banks, CeBIH promotes the adoption of digital banking services and works closely with regulators to ensure smooth integration of open banking across the financial ecosystem.
The West African Bankers Association (WABA): This regional body represents financial institutions across West Africa and advocates for standardized cross-border policies that support open banking and financial inclusion. WABA plays an instrumental role in aligning Nigeria’s open banking framework with broader regional goals for seamless financial services.
These stakeholders are pivotal to Nigeria’s open banking ecosystem, each playing their part in driving innovation, competition, and consumer protection.
Important Links
Open Banking Nigeria (Open Technology Foundation) is a non-profit backed by a group of industry experts across banking, fintech, risk management, and more to drive and launch the open banking standard in Nigeria.
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