The Central Bank of Nigeria has issued operational guidelines for open banking in Nigeria to ensure stability in the nation’s financial system.
The apex bank in a circular referenced, ‘PSM/DIR/PUB/CIR/001/043’, and dated March 7, 2023, said the guidelines would create greater access to customer-focused data sharing between banks and third-party firms.
The circular signed by the Director of Payment Services Management Department, Musa Jimoh, entitled, ‘Issuance of operational guidelines for open banking in Nigeria’, said the guidelines were part of the Central Bank’s mandate to ensure financial stability in Nigeria.
According to the circular, all stakeholders were mandated to ensure strict compliance with the guidelines and other regulations.
The circular read, “The Central bank of Nigeria in furtherance of its mandate for the stability of the financial system and pursuant to its role in deepening the financial system, at this moment issues the operational guidelines for open banking in Nigeria.
“The adoption of Open Banking in Nigeria will foster customer permissioned data between banks and third-party firms to enable the building of customer-focused products and services.
“All stakeholders are required to ensure strict compliance with the guidelines and all other regulations, as the CBN continues to monitor developments and issue guidance as may be appropriate.”
Open banking enables the sharing of customer-permissioned data between banks and third-party firms. This system allows banks to securely share their customer data with third-party companies, such as fintech and other financial service providers, with the consent of their customers.
It is currently practised in the United Kingdom and gaining momentum in several countries of the world.
This sharing of data is done through Application Programming Interfaces, which acts as a bridge between the bank’s systems and those of the third-party firms.
Once a customer gives consent for data to be shared, the third-party firm can access thei data through the bank’s APIs. This data includes information about the customer’s transactions, account balances and other relevant information. The third-party firm can then use this data to develop innovative products and services that are tailored to the customer’s needs.