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Nigeria Becomes Africa’s Open Banking Regulation Pioneer

Started by forex4you, Mar 13, 2023, 11:01 am

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Nigeria Becomes Africa's Open Banking Regulation Pioneer

<p>Nigeria, Africa's biggest economy, has become the first country in the
continent to issue operational guidelines on open banking. The Central Bank of
Nigeria (CBN) in <a href="" target="_blank" rel="follow">a circular</a> released earlier
this week announced that it had developed the open banking regulation in
partnership with industry stakeholders.</p><p>Open banking is <a href="" target="_blank" rel="follow">a new practice</a> that involves banks
sharing financial information with third-party providers through
application programming interfaces (APIs) to promote the development of innovative
products targeted at meeting consumer needs. The concept is <a href="" target="_blank" rel="follow">gaining significant traction</a> across the world.</p><p>Nigeria's CBN Outlines Open Banking Standards</p><p>The new guidelines on open banking were released via a circular signed by Musa
Jimoh, the Director of the Payment System Management Department at the CBN. The circular was directed at deposit money banks, mobile money operators and
<a href="" target="_blank" rel="follow">payment service providers in the country</a>. The guidelines state the
principles for data sharing across Nigeria's banking and payment
systems. </p><p>The document prescribes the minimum security standards that industry
stakeholders should follow when accessing and storing customer data. In addition, it states the
minimum privacy, operational, customer experience and <a href="" class="terms__main-term" id="aedb745c-adf9-415f-97e2-ee56a920f0f8" target="_blank">risk management</a> standards
to be followed by banks and their third-party providers under the country's
open banking regime. </p><p>The Nigerian <a href="" target="_blank" rel="follow">apex banking authority</a> in the circular
noted that the guidelines are targeted at "enhancing efficiency, competition
and access to financial services in Nigeria."</p><p>"The adoption of Open Banking in Nigeria will foster the sharing of
customer-permissioned data between banks and third-party firms to enable the
building of customer-focused products and services," Jimoh explained in the circular.</p><p>The Road to Open Banking Regulations in Nigeria</p><p>Open banking <a href="" class="terms__secondary-term" id="341d154e-1396-4d12-a357-4837e79c4146" target="_blank">regulations</a> in Nigeria date back to 2017 when a group of
industry stakeholders <a href="" target="_blank" rel="follow">formed the Open Banking Nigeria</a> group. However, the CBN <a href="" target="_blank" rel="follow">first stated interest</a> in an open banking
system in 2018 when Jimoh noted that the banking authority was "looking at how to raise
the standard for all banks and fintech to plug in." </p><p>Three years later, the CBN <a href="" target="_blank" rel="follow">released a regulatory framework</a> for open banking in
Nigeria. The framework was later developed into a draft of operational
guidelines in May 2022. </p><p>Commenting on the new regulations, Open Banking Nigeria noted
that the guidelines will be supported by the Nigeria Data Protection Regulation
(NDPR) which was released in 2009. "Data privacy is a foundation pillar for
open banking," the group wrote in <a href="" target="_blank" rel="follow">a blog post</a>.</p>

This article was written by Solomon Oladipupo at

Source: Nigeria Becomes Africa's Open Banking Regulation Pioneer
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