The Central Bank of Nigeria (CBN) has approved the rules for open banking. This means that Nigeria will now have an open banking regime. With this rule, Nigeria is the first African country to have an Open Banking rule.
Musa Jimoh, in charge of the CBN’s Payments System Management Department, sent a circular with the rules on March 7, 2023.
Open banking lets banks do business and lets third-party financial service providers access banking information about customers through APIs.
It encourages new ideas and the linking of accounts and data from different institutions, which could change the banking industry.
Open banking in Nigeria is expected to start a new era of financial innovation and inclusion in Nigeria and across Africa. Nigeria joins the U.S., UK, India, South Korea, and other countries with some Open Banking regulations.
Penser says that by 2026, the Open Banking market will be worth $395 billion and have close to 39 million customers worldwide.
The release of the guidelines ends a long journey for open banking in Nigeria. The journey started in 2017 when Adedeji Olowe led a group of industry veterans to form the Open Banking Nigeria working group.
The group talked with banks, fintechs, and international stakeholders. This led to the CBN releasing the regulatory framework for open banking in Nigeria in February 2021. This set the stage for the industry committee to draft operational guidelines, now the law for bankers and fintechs supervised by the CBN.
Open banking is supposed to make it easier for fintechs to get better data and help Nigeria become more financially inclusive and innovative. Open banking is expected to help companies like Mono, Okra, and Stitch, part of the Open Banking Nigeria coalition. Sterling Bank, KPMG, PwC, EY, Paystack, Teamapt, Wallet Africa, and OnePipe is this group’s early backers.