Nigerian bank customers can now have more options and value from their financial institutions, as the Central Bank of Nigeria has released the Regulatory Framework for Open Banking in the country.
Open banking is the practice of sharing financial information electronically, securely, and only under conditions that customers approve of, allowing access to accounts, transactions and other financial data from banks and non-bank financial institutions.
Basically, it uses Application Programming Interfaces that allow Third Party Providers to access financial information efficiently to ultimately promote the development of new apps and services.
A circular signed by Director, Payments System Management Department of the CBN, Musa Jimoh, to all Deposit Money Banks and Payment Service Providers yesterday, said the framework for open banking was in line with CBN’s mandate to promote financial system stability.
According to the circular, the framework establishes principles for data sharing across the banking and payments ecosystem, which will promote innovation, broaden the range of financial products and services, and deepen financial inclusion.
The regulatory framework stipulates, among others, data and API access requirements, principles for API, data, technical design and information security specifications.
The opportunities presented by open banking for enhancing financial inclusion, improving competition in the financial services space and promoting efficient services are compelling cases for the implementation of open banking in Nigeria, the circular added.
The framework is expected to foster the sharing and leveraging of customer-permissioned data by banks with third party firms to build solutions and services that provide efficiency, greater financial transparency and options for account holders and to enhance access to financial services in Nigeria.
Areas covered under the framework include payments and remittance services, collection and disbursement services, deposit-taking, credit, personal finance advisory and management, treasury management, credit ratings/scoring, mortgage, leasing/hire purchase and other services as may be determined by the CBN.
Open banking efforts are a big deal for banks, regulators and TPPs. And consumers should eventually have more options for managing their money, borrowing, and making payments.
