The Central Bank of Nigeria has approved the operational guidelines to open banking in Nigeria kickstarting an open banking regime in Nigeria. The guideline was released via a circular by Musa Jimoh, the Director of the CBN’s Payments System Management Department on March 7, 2023.
The open banking regulation would usher in a transformation time for financial innovation and financial inclusion in Nigeria and Africa as a whole.
The release of the final guideline is a culmination of a long journey for open banking in Nigeria. On June 1, 2017, a group of industry veterans, led by Adedeji Olowe, decided that Nigeria needs to lead with payments innovation and formed an open banking working group which ultimately became formalized as Open Banking Nigeria. The group engaged with banks, fintechs, CBN, and other international stakeholders.
Early backers of open banking in Nigeria includes but not limited to Sterling Bank, KPMG, PwC, EY, Paystack, Teamapt, Wallet Africa, and OnePipe. The coalition now expanded to include the likes of Mono, Switch, Lendsqr, Palmpay, Carbon, and Trium.
Subsequently, the CBN released the regulatory framework for open banking Nigeria on February 7, 2021 which laid the groundwork for an industry committee to create the draft of operational guidelines in May 2022. This draft is what has now become the law for bankers and fintechs supervised by the CBN.
Supporting this is also the Nigeria Data Protection Regulation (NDPR) which was released in 2019 as data privacy is a foundational pillar for open banking.
While waiting for open banking, a lot of smart fintechs, such as Mono, Okra, Stitch (all members of the Open Banking Nigeria coalition) have gone ahead to create innovative hacks. But their days of pain are over – they would now be able to provide the industry with more enriched data than is currently available.
Open banking would usher in a new age of financial inclusion and financial innovation. Cementing Nigeria’s lead as a global pioneer in payments and financial services.
Over the next few days, Open Banking Nigeria would provide more insights into what would be the next steps for banks and fintech in meeting up with the CBN standards and requirements.