In order to foster innovation and widen the range of financial goods and services available to bank customers, the Central Bank of Nigeria has published the legal framework for Open Banking in Nigeria.
This was revealed in a circular issued recently called “Operational rules for open banking in Nigeria.”
Free banking is a banking practice in which banks and non-bank financial organizations provide third-party financial service providers open access to customer banking, transaction, and other financial data via application programming interfaces (APIs).
By allowing more personalized financial products and services to be supplied, open banking has the potential to alter the banking industry’s competitive landscape and customer experience.
The CBN said, “The Regulatory Framework for Open Banking in Nigeria 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.”
The CBN stated that the guideline to data in the financial sector would enable customers to access innovative financial products and services “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 to access innovative financial products and services. This is anticipated to drive competition and improve access to banking and payments services.”
CBN added, “Participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy standards, operational standards, risk management standards and customer experience standards as prescribed by the Bank.”
The CBN stated that the open banking proposition allows any organisation that has data of customers which may be exchanged with other entities to provide innovative financial services within Nigeria, to be eligible to participate in the Open Banking ecosystem.