In Africa, Nigeria is first to adopt these new banking regulations. In the early days in March 2023, a circular that had the signature of director of the payment services management department, Musa Jimoh, it was disclosed that there was an issuance of operational guidelines for open banking by the Central Bank of Nigeria (CBN) to aid the country’s newly adopted banking regulations. The circular further disclosed that this new method of banking would encourage customer-allowed data between banks and third party organizations to ensure development of products and services that focuses on customers.
The Apex Bank of Nigeria has permitted third-party institutions such as mobile money apps and financial technology companies access to customer data of other financial institutions which includes data transactions. Application of these new regulations likewise entails inclusion of agency banking, Know your Customer (KYC), financial inclusion, credit scoring or rating and many more. This regulatory framework for open banking in the country was released by the CBN on February 7, 2021 which propelled the May 2022 operational guidelines draft.
Guidelines ensure competition and efficiency.
Now, the previously recognized draft is a law for banks and Fintech companies under supervision of the CBN. In the banking and payments system, the framework has enacted principles for data sharing to aid promotion of innovations and widen the availability range of financial products and services to bank customers. Therefore, there is recognition of data ownership and control by customers of financial and non-financial services. This recognition also approves their rights to permit authorizations to service providers for access to innovative products and services.
This new financial technique embraced by Africa’s largest economy is projected to foster speedy approval timelines for customers during application of loans on the basis of their credit or financial history. Banks, also, through charges enforced on third parties institutions for access can build revenue. Through this regulation, there is an expectation of enhancement in competition, efficiency and access to financial services in the country. With these guidelines, there will be stable competition while improving access to financial and payment services.
Technique has support of stakeholders with industry experience.
Additionally, it has been affirmed that there are three major players in the system (the Application Programming Interface (API) provider, consumer and the customer). The API provider, through an interface, provides data and services as a participant to another participant, while the consumer is granted access to data and services through API availed by an API provider. A consumer could be a financial institution, a Fast-Moving Consumer Goods (FMCG), Payroll Service Bureau and many others. The consumer owns the shared data and gives consent for data release to access financial services.
The project is firmly supported by stakeholders with vast industry experience and passion to ensure easy and simplified payments in Nigeria. Some of the earliest supporters of open banking in Nigeria are sterling bank, PwC, Paystack, Wallet Africa, KPMG, EY, Teamapt, OnePipe. However, other financial institutions like Mono, Lendsqr, Carbon, Switch, Palmpay and Trium have also shown support. The idea of open banking in Nigeria was led by Adedeji Olowe and a group of industry experts who were keen on ensuring payment innovations in the country.
Consumers are protected by both the CBN and NDPB.
Furthermore, consumers are safe with the apex bank’s monitoring, the 2021 Data Protection Bill and the established data privacy guidelines which operators are bound to adhere to so as to keep data away from those with bad intentions. The president of the federation, Muhammadu Buhari, also ensured approval of the establishment of the Nigeria Data Protection Bureau (NDPB) to oversee data protection enforcement over the National Information Technology Development Agency (NITDA) and ensure safety of consumer data.
Related Link
Open banking: Website
Nigeria adopts new banking technique – The CBN released the project’s regulatory framework earlier in 2021. – Express your point of view.
The country’s newly adopted banking regulations is a good one. It will bring about stability, positive competition and improve access to financial and payment services.
Bank customers will enjoy the advantage of the new banking technique as it will ensure development of products and services that focuses on customers.
I am all for this innovative approach to banking, which, among other benefits, would facilitate the sharing of customer-permitted data between financial institutions thereby facilitating the creation of goods and services with the consumer in mind.
I am ecstatic about this new banking approach since it will result in steady competitiveness while also boosting utilization of banking and transaction services, and as a result, it will be incredibly advantageous for us.
The country has made the right choice with its recent banking reforms. It will help maintain order, encourage healthy rivalry, and widen availability of banking and monetary transactions.
It is wonderful that the idea has the unwavering backing of individuals that have extensive business knowledge and a burning desire to make sure that transfers in Nigeria are straightforward and streamlined.
The country’s newly adopted banking regulations is a very good tactics. It will give positive results and enhance fasted growth economy to the development of the state.
Things like this can boost business and help our clients out because the customer actually owns the information that is being shared and has given their permission for it to be released so that they can gain access to financial services.
This new banking technique has a lot of advantages that comes with it particularly sharing data with third party and eventually it will boost banking.
I am very pleased with this new banking strategy because it will increase our competitiveness and the number of people who use our banking and transaction services.
Getting new banking technique is really a nice move our old way of banking is not working well we need needs to bring positive and improvement in banking so the bank customer can be satisfied by their service
This new implemented banking technique may end up encouraging more people to engage in banking because of its enticing new features that it entails.
So far the new banking technique will help make banking easy and faster,then it’s a good one. I hope the guidelines are well obeyed by the banking industry.
Nigeria adopts new banking technique. Nice move but hope it will go a long way in helping customers. A welcome development for the banking sector
This new techniques adopt by the central has really change the face of the banking system in the country because people are now more confident in the system and sure nothing can happen to the savings or investment.
It’s great that people with deep business experience and a strong desire to simplify and speed transfers in Nigeria are so strongly behind the concept.
The new Banking technique adopted by Nigerian banks should be able to address some of the challenges currently confronting the country. The technicality involve in Banking system should be improved for easy transactions.
Beyond Nigeria adopting the new regulatory banking technique released by CBN, the technology employed for customers transactions should be improved.
The new principle of data sharing among banks would promote creativity and inventions. It would also ensure efficiency
Because the customer genuinely owns the information being shared and has given their consent for it to be released so they can access financial services, actions like these can increase business and benefit our clients.