CBN has unveiled new operational guidelines for Open Banking — Open Banking works by allowing banks to securely share customer data with third-party companies...

CBN Paves Way for Innovative Financial Products with New Guidelines on Open Banking in Nigeria

The Central Bank of Nigeria (CBN) has unveiled new operational guidelines for Open Banking, marking a major milestone in the country's financial sector. This new framework will allow the sharing of customer-permissioned data between banks and third-party firms, with the objective of creating customer-centric products and services, enhancing efficiency, and promoting competition in the sector.

In a statement issued on Monday, Musa I. Jimoh, Director of the Payments System Management Department at the CBN, stated that the adoption of Open Banking will promote the stability of the financial system in Nigeria, and deepen its functionality. The guidelines are expected to improve access to financial services in the country.

All stakeholders in the financial sector are required to adhere strictly to the guidelines and other regulations, as stipulated by the CBN. The bank has also reassured the public of its commitment to monitoring sector developments and issuing appropriate guidance as necessary.

Open Banking has gained momentum in several countries globally, including the United Kingdom, where it was introduced in 2018. The concept allows banks to share data securely with third-party firms, enabling them to develop innovative products and services for customers.

The regulatory framework for Open Banking in Nigeria was introduced by the CBN in 2022 to promote data sharing across the banking and payments system, encourage innovation, and expand the range of financial products and services available to customers.

The CBN's decision to introduce Open Banking in Nigeria is expected to improve access to financial services for millions of Nigerians, promote innovation, and create new opportunities for fintech firms in the country.

Open Banking works by allowing banks to securely share customer data with third-party companies, such as fintechs and other financial service providers, with customer consent. This data sharing is facilitated through Application Programming Interfaces (APIs), which act as a bridge between the bank's systems and those of the third-party firms.

With customer permission, third-party firms can access customer data through the bank's APIs, including information about the customer's transactions, account balances, and other relevant information. This data can then be used to develop innovative products and services tailored to the customer's needs.

Open Banking has the potential to transform the financial industry by fostering innovation, competition, and collaboration among banks and fintech firms. It is expected to lead to the creation of new and innovative financial products and services, as well as greater access to financial services for those who are currently underserved by the traditional banking system.