The Central Bank of Nigeria (CBN) has issued the regulatory framework for Open Banking in Nigeria to enhance competition and innovation in the banking system.
It disclosed this in its ‘Operational guidelines for open banking in Nigeria’ released in May 2022.
The guidelines said, “The Central Bank of Nigeria, hereafter called the Bank, had issued the regulatory framework for open banking in Nigeria to enhance competition and innovation in the banking system.
“The Bank recognised the existence of an ecosystem for Application Programming Interface in the banking and payments system and is aware of various efforts in the industry to develop acceptable standards among stakeholders.”
According to the CBN, open banking promotes innovations and broadens financial products and services, which involves sharing of customer data and interconnectivity of systems, therefore, exposing the participants to risks such as cybersecurity, money laundering, regulatory and compliance, contract management, product management among others.
Open banking, it added, offers benefits and opportunities to the financial sector but is accompanied by risks that could undermine the objectives if not properly managed.
The CBN said the framework 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.
As a result, it added that open banking recognizes the ownership and control of data by customers of financial and non-financial services and their right to grant authorizations to service providers to access innovative financial products and services.
The CBN said that this is anticipated to drive competition and improve access to banking and payments services.