Nigeria’s open banking rollout exposes missing AI guardrails, expert warns

Nigeria is on the verge of activating one of Africa’s most ambitious financial reforms as its long-awaited open banking system enters the final phase of implementation.

But while the technology infrastructure is largely ready, experts are warning that the country has yet to build the regulatory guardrails needed to govern the artificial intelligence systems that will increasingly make decisions using customers’ financial data.

The warning comes as the Central Bank of Nigeria (CBN) advances the rollout of its open banking framework, a project expected to transform how banks, fintech firms and licensed financial institutions share customer-approved financial information.

Industry experts say the system has the potential to unlock faster digital payments, expand access to credit, improve financial inclusion and stimulate innovation across Nigeria’s financial services sector. However, they caution that without clear rules governing artificial intelligence, the same system could also introduce new risks related to bias, transparency and accountability.

Read also: As Nigeria prepares for the open banking rollout

Akinwumi Opeoluwa Ayodele, CISSP, IT governance and risk specialist, told BusinessDay that Nigeria has made remarkable progress in developing the infrastructure for open banking but has not kept pace in regulating the AI systems that will analyse and make decisions using the vast amount of financial data expected to flow through the platform.

“Open banking rails are ready. The rules for the AI running on them are not,” Ayodele said.

According to him, Nigeria risks allowing automated decision-making to become deeply embedded in its financial system without establishing adequate safeguards to ensure fairness, transparency and accountability.

The CBN became the first regulator in Africa to issue a formal open banking regulatory framework in 2021. It followed this with operational guidelines in 2023 before beginning the development of the underlying infrastructure in 2025.

The new ecosystem includes a central registry managed by the Nigeria Inter-Bank Settlement System (NIBSS), customer consent mechanisms linked to the Bank Verification Number (BVN), and structured access rules for licensed third-party service providers.

The phased rollout, which is continuing through 2026, represents a major shift in Nigeria’s digital financial landscape.

Under the framework, customers will be able to authorise banks and fintech companies to securely share their financial data through standardised application programming interfaces (APIs). This could significantly improve credit assessments, product innovation, payment services and financial inclusion.

However, experts believe the next challenge lies not in moving data but in controlling how artificial intelligence interprets that information.

Nigeria currently has a National Artificial Intelligence Strategy introduced in 2025 to guide AI development over the next five years. Yet the country still lacks a dedicated AI law or an independent regulator with powers to oversee AI deployment across sectors.

This leaves several important questions unanswered.

There are currently no binding rules that clearly define how AI systems used in lending, fraud detection or risk assessment should be audited, how developers should test for algorithmic bias, or whether customers have the right to receive explanations when automated systems reject loan applications or make other financial decisions affecting them.

Although Nigeria’s Data Protection Act provides safeguards for personal information, it does not specifically regulate how artificial intelligence systems make decisions using that data.

As financial institutions increasingly move from traditional software to machine learning models, experts say this regulatory gap is becoming more significant.

A senior regulatory source familiar with the CBN’s fintech sandbox programme disclosed that the apex bank has already started informally reviewing issues such as fairness, explainability and transparency when assessing AI-powered financial products submitted for testing.

However, the source noted that these expectations remain largely confined to the sandbox environment and have not yet become mandatory requirements across the wider financial ecosystem.

“This is still largely a sandbox conversation. The challenge is scaling those expectations across every participant in open banking,” the source said.

Industry observers say the stakes are particularly high because open banking will dramatically increase the volume of structured financial information available across the industry.

Transaction histories, identity records connected to BVNs, spending patterns and customer behaviour will increasingly be processed not by humans but by artificial intelligence systems designed to assess creditworthiness, detect fraud and personalise financial services.

Many of these AI systems rely on cloud-based machine learning infrastructure and, in some cases, foreign-hosted large language models.

This raises additional concerns around data sovereignty and cross-border processing of sensitive financial information.

Although Nigeria’s data protection laws regulate international transfers of personal data, experts say it remains unclear how those provisions will apply when financial information is processed through AI platforms hosted outside the country.

The issue is especially relevant in Nigeria’s rapidly expanding digital lending industry, where many lenders already use artificial intelligence to assess borrowers based on alternative data such as mobile phone usage, airtime purchases and transaction behaviour.

While these innovations have helped millions of Nigerians access credit previously unavailable through conventional banking, they have also attracted criticism over transparency, data quality and repayment risks.

Studies of digital lending have shown that poorly supervised algorithmic models can contribute to higher loan defaults when automated decisions are made with limited human oversight.

Analysts believe open banking could improve the quality of credit decisions by giving lenders access to richer and more reliable customer data.

At the same time, they warn that flawed assumptions embedded in AI models could spread across the financial system much faster if left unchecked. Rather than waiting for a comprehensive national AI law, Ayodele believes Nigeria can address the challenge by integrating AI governance into existing financial regulation.

He recommends that the CBN require every organisation joining the open banking ecosystem to disclose the AI models they use, where those systems are hosted and how their decisions can be explained.

He also proposes merging Nigeria’s emerging AI sandbox programmes with the CBN’s existing fintech sandbox to avoid fragmented oversight.

Read also: How Nigerian states are opening up to greater fiscal transparency

Beyond that, he argues that responsibility for supervising AI risks within financial services should be formally assigned to the CBN under the implementation roadmap for Nigeria’s National Artificial Intelligence Strategy.

According to him, the apex bank already possesses the supervisory experience and institutional capacity needed to oversee AI adoption within the financial sector.

The debate extends beyond Nigeria.

As the first African country to publish a formal open banking framework, Nigeria’s approach is being closely monitored by regulators across the continent considering similar reforms.

At the same time, the African Union’s Continental Artificial Intelligence Strategy remains at an early stage of implementation, with many member states yet to establish dedicated AI governance institutions.

Analysts believe that if Nigeria successfully combines open banking with strong AI governance, it could establish a benchmark for other African markets, particularly as cross-border payment systems such as the Pan-African Payment and Settlement System (PAPSS) continue to expand financial integration across the continent.

However, they warn that delaying AI regulation until after open banking is fully operational could make future corrections more difficult and expensive as interconnected financial systems become increasingly dependent on automated decision-making.

For now, Nigeria stands at a critical point in its digital financial transformation.

The technology infrastructure for open banking is approaching completion, but the governance framework needed to ensure that artificial intelligence operates fairly, transparently and responsibly is still evolving.

As Ayodele put it; “The infrastructure for data is ready. What is missing is the infrastructure for accountability.”