The Central Bank of Nigeria has issued the regulatory framework for Open Banking in Nigeria in its efforts to enhance competition and innovation in the banking system.
It disclosed this in its ‘Operational guidelines for open banking in Nigeria’ released in May, 2022.
The guidelines said, “The Central Bank of Nigeria, hereafter called the Bank, had issued the regulatory framework for open banking in Nigeria in its efforts to enhance competition and innovation in the banking system.
“The Bank recognised the existence of an ecosystem for Application Programming Interface in the banking and payments system and is aware of various efforts in the industry to develop acceptable standards among stakeholders.”
According to the CBN, open banking promotes innovations and broadens financial products and services, which involves sharing of customer data and inter-connectivity of systems, therefore, exposing the participants to risks such as cybersecurity, money laundering, regulatory and compliance, contract management, product management among others.
Open banking, it added, offers benefits and opportunities to the financial sector but is accompanied with risks that could undermine the objectives if not properly managed.
The CBN said the framework established principles for data sharing across the banking and payments system to promote innovations and broaden the range of financial products and services available to bank customers.
As a result, it added, open banking recognises the ownership and control of data by customers of financial and non-financial services, and their right to grant authorisations to service providers for the purpose of accessing innovative financial products and services.
This is anticipated to drive competition and improve accessibility to banking and payments services, the CBN said.