We have spent years making the case for open banking in Nigeria. We have helped build the framework and worked with regulators and industry to get it closer to launch. But there is a version of the open banking conversation where it is expected to solve problems it was never built to solve. Where every gap in Nigeria’s financial system, from literacy to poverty to trust, is assumed to be something that open banking will eventually sort out.
That is a natural assumption to make about any large piece of new infrastructure, but it sets expectations that the system cannot meet. So this piece is about clarity. Open banking is a specific piece of infrastructure that does specific things well. It enables consented, standardized data sharing between financial institutions. It lowers the cost for fintechs to build products. It gives customers the ability to control who sees their financial data and for how long, and creates a common language where the system currently speaks in fragments. Those are real possibilities but the problems they leave untouched are not small.
The knowledge gap
Open banking assumes that when a customer is presented with a consent screen asking whether they want to share their transaction data with a third party, they understand what that means. It assumes they can evaluate whether the trade-off is worth it. It assumes they know what a third party is, what transaction data includes, and what “consent” means in a regulated context versus the “I agree” buttons they have been trained to tap without reading. That is a significant assumption in a country where financial literacy has been declining, not improving. EFInA’s 2023 Access to Finance survey found that the share of adults with low financial capability rose from 20% in 2020 to 34.5% in 2023. Adults classified as having high financial capability dropped from 38% to 22% over the same period. A separate global benchmark put Nigeria’s financial literacy rate at 26%, below Kenya, South Africa, and the global average.
These are not people who lack intelligence. They lack exposure, context, and in many cases, the basic financial language that would allow them to make informed decisions about products they have never encountered before. Financial literacy has a more significant impact on financial inclusion than access to fintech services themselves. In other words, it does not matter how good the tools are if people do not understand what they do. Open banking does not teach people what a budgeting app is, or why sharing transaction data with a lender might result in a better interest rate, or how to tell the difference between a legitimate service provider and one that will misuse their information. Those are education, awareness, and product design problems. They require sustained investment in financial literacy that runs alongside the infrastructure, not something the infrastructure produces on its own.
India’s experience reinforces this. Four years into their Account Aggregator framework, only 12% of smartphone users recognized the concept. Among those who chose not to participate, the most common reason was not understanding the process. Introducing a consent layer can actually reduce participation among people who are already uncertain about how their data is used. The technology was not the barrier. Comprehension was. If Nigeria launches open banking and the first experience millions of people have is a consent screen they do not understand, the outcome will not be adoption. It will be confusion, followed by avoidance, followed by a trust problem that did not need to exist.
The access gap
Open banking creates better data-sharing rails between financial institutions. That sentence contains an assumption so obvious it is easy to overlook: you have to be at a financial institution to benefit. According to EFInA’s 2023 survey, about 26% of Nigerian adults remain formally excluded from the financial system. That is roughly 29 million people who do not have a bank account, a mobile money wallet, or any formal financial relationship. For them, open banking is invisible. There is no data to share because there is no account generating data. This is not something open banking was designed to solve, and saying so is not a criticism.
Open banking is infrastructure for the financial system that exists. It improves the experience of people who are already inside that system. Reaching the people who are outside it requires a different kind of intervention: agent networks, simplified onboarding, affordable identity verification, products designed for people earning irregular income. Those are access and inclusion problems, and they need their own dedicated strategies. What is worth noting is that we have thought carefully about making open banking as inclusive as possible within its scope. Nigeria’s open banking standard includes a protocol for authentication and consent over what we call “dumb channels,” USSD, SMS, POS terminals, ATMs, and even bank branches.
These are the channels that carry banking to the mass market. The standard was designed so that a customer on a basic phone, without a smartphone or internet connection, can still participate in open banking through their bank’s existing channels. And for the 26% who do not have a bank account, getting them into the financial system is a prerequisite, not something the system itself can deliver.
The trust gap
This is the one that sits closest to home. Open banking asks people to share their financial data. That is the entire premise. A customer authorizes a third party to access information from their bank, and in return, they get a better service, a fairer loan assessment, a clearer view of their finances. The exchange only works if the customer believes the system will handle their data responsibly and that if something goes wrong, there is a clear path to resolution. That belief is not something Nigeria’s financial system has earned consistently.
Again, EFInA’s 2023 survey found that a third of formally served Nigerians have been surprised by unexpected fees. Nearly a quarter have experienced fraud or loss of money. Twenty percent report being unfairly treated by bank staff or agents. Less than half feel that product information is communicated to them clearly. These are lived experiences that shape how people respond when someone asks them to open up their financial data to a new party.
When your last experience with a financial institution involved money disappearing from your account and customer service leading nowhere, the rational response to sharing your data is no. Open banking does not rebuild the trust that has been eroded by years of unexplained deductions, failed transactions that take weeks to reverse, and fraud incidents that made national headlines. It cannot make banks better at customer service or faster at resolving disputes. It also cannot retroactively fix the experiences that taught people to guard their financial information closely.
What open banking does is create a more structured, regulated, and transparent framework for data sharing than what exists today. It replaces screen-scraping with consented API access and gives customers a centralized dashboard to view and revoke permissions. It also sets time limits on data access and requires clear disclosure of what is being shared and why. These are real improvements over the current state of affairs, where data sharing happens through informal, unregulated channels with little customer control. But even the best consent framework in the world cannot generate trust in a population that has learned caution through experience. Trust will have to be rebuilt through consistent, visible, boring reliability.
What open banking actually does, and why it still matters
At this point, it is worth restating what it can do within Nigeria’s financial system.
Open banking lowers the cost of building financial products.
Today, a fintech that wants to access a customer’s bank data often has to negotiate bilateral agreements with each bank, build and maintain separate integrations, and work around inconsistent formats and unreliable connections. Open banking replaces that with a standardized API layer and a common set of rules. That reduces the time, cost, and complexity of innovation, which means more products, built faster, reaching more people.
Open banking improves credit decisions.
When a lender can see a borrower’s actual financial behaviour across multiple accounts with their consent, the assessment becomes more accurate. That means fewer rejections of people who are actually creditworthy, and potentially lower interest rates over time as lender risk drops.
Open banking gives customers control over their data for the first time.
The centralized consent management system that NIBSS will operate means Nigerians will be able to see who has access to their data, revoke it when they want, and set limits on how long that access lasts. That is more control than anyone has right now.
These are meaningful gains. They just are not the same thing as solving financial exclusion, closing the literacy gap, or rebuilding institutional trust. Confusing the two does not help anyone, least of all the people we are trying to serve.
Where this leaves us
Open banking is good infrastructure. The kind that, when it works, makes better things possible. But infrastructure does not operate in a vacuum. It operates on top of whatever foundation already exists. And in Nigeria, that foundation has gaps that open banking was not built to fill.
The knowledge gap requires sustained investment in financial literacy, not just at the policy level but at the product level. Every service built on open banking will need to explain itself clearly enough that someone encountering it for the first time can make an informed decision. The access gap requires continued work on financial inclusion, getting more Nigerians into the formal financial system so they can eventually benefit from the data-sharing rails being built. The trust gap requires the financial system to earn back the confidence it has lost through years of inconsistent service, unresolved disputes, and high-profile fraud. No framework, however well designed, can substitute for that.
We are advocates for open banking because we have seen what it can do when the conditions are right. Being honest about the conditions that are not yet right is not a contradiction. It is the only way to make sure open banking is judged by what it actually delivers rather than by expectations it was never designed to meet.
