Nigeria embarked on its open banking journey in 2017, driven by a coalition of industry stakeholders advocating for increased financial innovation and inclusion. This initiative mirrored the UK’s efforts under the GDPR and PSD2 to establish open banking.
While the UK initially used open banking as a regulatory tool for its largest banks, Nigeria saw it as a transformative opportunity. Open Banking Nigeria was founded in 2017, setting the stage for open banking in Africa. Although the journey took longer than expected, it is nearing completion.
Open banking has the potential to revolutionize regions where it is adopted but comes with its complexities. The definition of open banking can vary among experts as it addresses different issues for different individuals.
In Nigeria, open banking represents a new era of innovation, allowing customers to grant access to their information to fintechs and financial institutions. Despite advancements in digital payments, Nigeria is just scratching the surface of its digital payment potential.
The stakeholders driving open banking in Nigeria include regulators like the Central Bank of Nigeria (CBN) and the National Data Protection Commission (NDPC), as well as industry players like the Nigeria Interbank Settlement System (NIBSS) and Open Banking Nigeria (OBN).
Regulators
Regulation forms the foundation of successful open banking initiatives. The CBN, NDPC, and SEC play crucial roles in shaping open banking through regulatory frameworks and guidelines.
Nigeria Interbank Settlement System (NIBSS)
NIBSS, mandated by the CBN, operates the Open Banking Registry (OBR) and the Open Banking Consent Management System (OBCMS), essential components for open banking in Nigeria.
OBN ecosystem facilitators
The OBN ecosystem brings together regulators, traditional banks, fintech innovators, and end users to drive Nigeria’s open banking revolution.
Traditional Banks (API Providers)
Traditional banks serve as open banking API providers, supplying APIs that enable data access and integration for financial institutions. They play a significant role in shaping the future of open banking in Africa.
Fintechs (API Consumers)
Fintechs, categorized as API consumers, connect to APIs provided by banks to access data and services. Key fintech players in Nigeria are actively involved in open banking, leveraging APIs to enhance their offerings.
End users
End users include individuals and businesses granting access to their bank accounts for data sharing or transactions. Companies like Piggyvest and Bamboo are poised to transform their operations with open banking in Nigeria.
Other key advocates, industry associations, and stakeholders
The open banking movement in Nigeria is supported by advocates like CeBIH and WABA, as well as fintech associations driving innovation in the financial sector.
Open banking’s promising future
The journey towards open banking in Nigeria began in 2017 and is approaching a significant milestone. Continued collaboration and innovation among stakeholders will be vital for open banking to realize its full potential in Nigeria and serve as a model for other African nations.
With diverse stakeholders contributing to the ecosystem, from regulatory bodies to industry players and advocacy groups, open banking in Nigeria holds promise for a more dynamic and accessible financial landscape.