Under the guidelines, customers must consent before their data for available banking products and services can be obtained. The move towards open banking in Nigeria aims to encourage the sharing of customer-permissioned data between banks and third-party firms, allowing for building of customer-focused products and services. The guidelines also aim to enhance efficiency, competition, and access to financial services.
Musa Jimoh, the director of the CBN's Payments System Management Department, stated that the guidelines further the bank's mandate to stabilise the financial system and deepen financial inclusion. Jimoh added that stakeholders must strictly comply with the policies and other regulations to promote innovations and broaden the range of financial products and services available to bank customers.
The CBN's operational guidelines on open banking in Nigeria come after the bank launched a regulatory sandbox in November 2020. The sandbox aims to promote innovation and foster the development of new products and services in the financial sector. The CBN expects the sandbox to provide a testing environment for financial technology startups and innovators to develop their ideas, products, and services in a controlled environment.
Open banking refers to banks sharing data securely with third-party providers. It enables the development of new financial products and services tailored to customer needs. The concept of open banking has gained popularity worldwide as financial institutions look for new ways to improve customer experience, lower costs, and enhance financial inclusion.
In Nigeria, implementing open banking is expected to promote innovation and competition in the financial sector. It will allow for new financial products and services catering to customers' needs. The move towards open banking will enhance financial inclusion, particularly for underserved and unserved communities.
The CBN has been at the forefront of efforts to promote financial inclusion in Nigeria. In recent years, the bank has launched various initiatives to expand access to financial services, including the introduction of agency banking, the creation of the National Financial Inclusion Strategy, and the launch of the Payment Service Bank (PSB) framework.
The PSB framework allows for the establishment of banks that focus on providing essential financial services to underserved and unserved communities. The CBN hopes that the PSB framework will enhance financial inclusion in Nigeria by providing access to financial services in remote and rural areas of the country.
The guidelines issued by the CBN on open banking are expected to enhance the development of innovative financial products and services in Nigeria. They will enable financial technology startups and innovators to leverage customer data to develop new products and services catering to customers' needs. The guidelines will also enhance competition in the financial sector, ultimately benefiting consumers.