The concept of Open Banking has been gathering waves over the years but reached a watershed with the pronouncement of the PSD2. Beyond Europe, countries such as Australia, Hong Kong, United Kingdom, and Nigeria are at various stages of review, design or implementation of Open Banking.
Open Banking is an initiative designed to enhance and improve banking experience. The concept of Open Banking is that individuals can provide banks and other online providers with secure access to their account(s) so that they can transact and manage their finances in ways best suited to them.
The push for Open Banking has been gathering steam in Nigeria since June 2017 when the Open Banking Nigeria initiative was founded. Unlike the other financial jurisdictions where Open Banking is backed by regulation or law, the Nigerian initiative is driven by advocacy as there is currently no regulatory demand on banks to upgrade. Nevertheless, the Nigerian banking customers, who are part of the global digital phenomenon, are asking tough questions from their banks why they cannot have the same benefits as customers in other countries.
Nigerian banks have been very receptive to the Open Banking concept as while it may be hard to believe, Nigeria is years ahead of many developed countries in terms of sophistication of our digital system. For example, Nigeria implemented instant bank transfers since 2011 while many advanced countries such as the USA do not have it. We were also one of the first countries to be 100% EMV compliant. Other key advances from Nigeria include NUBAN, Treasury Single Account (TSA), Bank Verification (BVN), amongst others.
Beyond the banks, the Open Banking Nigeria initiatives are also backed by top fitness such as Flutterwave, Kinexus, Paystack, TeamApt, and Wallet.ng amongst others.
Open Banking brings immense benefits to customers, banks, and Fintechs. It would provide customers with innovative products such as single view banking apps, power services such as Robo-advisory. Banks would see more revenue from additional transactions powered by open banking and driven by Fintechs. The transformation that Open Banking would bring to the financial industry would be more impactful than the ATM and interbank transfer as it frees banks and Fintechs to expand their sphere of innovation tremendously.
Open Banking Nigeria has been drumming support for Open Banking within the Nigeria financial space, touting its benefits and ability to expand the markets significantly. Additionally, to ease the burden of adoption by banks, Open Banking Nigeria has developed an open, non-partisan and free standard APIs for everyone to adopt. It has also provided a free sandbox for Fintechs to develop and certify against.
Open Banking Nigeria initiative is being driven by a group of banking and fintech industry veterans committed to the expansion of innovation within the Nigerian financial space under the umbrella of Open Technology Foundation, a not-for-profit, non-partisan group in partnership with eMaginations, Flutterwave, TeamApt, 2i Lab, Kinexus, Wallet, and Paystack.
The initiative was formally launched on Thursday, March 22, 2018, at the Lagos Oriental Hotel. The event was well attended by stakeholders across the industry.
During the opening remark, Adedeji Olowe described the advent of Open Banking to the emergence of ATMs in Nigeria where all the banks came together and decided to adopt a single standard. He explained that they went as far as contributing into creating a shared platform in Interswitch. Consequently, for the first time, customers could visit any bank ATM and withdraw cash, transfer money and buy airtime, amongst other transactions they could do, without thinking if the terminal belongs to their bank or not. “Banks have subsequently worked together to standardize on POS, NUBAN accounts, BVN, watch-list, etc”
Opeyemi Ndukwe, Management Consultant, Blue Advisory, during her keynote presentation described the current challenges and opportunities within the financial industry and how collaboration and partnership will help take the industry to the promised land.