In line with the mandate of the Central Bank of Nigeria (CBN) to promote financial system, the Committee of E-banking Industry Heads (CeBIH), has urged Nigerian financial institutions to adopt open banking system to promote and aid financial inclusion and personalized experiences for customers.
This was encouraged during CeBIH’s recent virtual conference themed ‘Advancing Open Banking in Nigeria.’
The guest speaker, managing director of Sterling Bank, Abubakar Suleiman emphasised the need for financial inclusion and personalized experiences for customers. He revealed that open banking solves an identified problem and creates value that has been dormant.
Even though experts talk about banking, according to him, the primary focus should be on data.
“The conversation about open banking is really about the value of data and the best use case for data. Customers benefit from open banking as it protects them from arbitrariness,” Abubakar noted.
Aisha Lantiwo, assistant director, Payment Systems, CBN, who spoke on behalf of Musa Itopa, director, Payments System Management, CBN, addressed the recent finance framework released by the government in February, emphasising the need for customers’ data to be encrypted.
She said the basic pillar of open banking is dependent on privacy, security, and customers’ consent; therefore, there is a need to respect privacy and customers’ consent because if there is a breach of data, someone will be losing money – either the customer or shareholders.
“Self-regulation is very important. CBN needs to carry out an oversight role from time to time,” she intoned.
Open banking is also known as open bank data and it is described as a banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of Application Programming Interfaces (APIs).
In February, the CBN issued the Regulatory Framework for Open Banking in Nigeria. The regulatory framework stipulated the sharing of data and Application Programming Interface (API) access requirements, principles for API, data, technical design, and information security specifications.
Improved customer experience, new revenue streams, and a sustainable service model for traditionally underserved markets are some of the known benefits that will trail the adoption of open banking in Nigeria.
In addition, customers will experience eased payments with smart devices, ease of remittance and currency exchange, and also the freedom to select from multiple service providers available.
“Open Banking is a means to an end and not an end in itself. Open Banking will significantly boost financial inclusion, access to consumer credit, innovation and transform how banking is done in Nigeria. With open banking, Nigeria can achieve its cashless policy,” said Adedeji Olowe, trustee, Open Technology Foundation, Nigeria.
While sharing the open banking experience in Canada, Christian Clapton, executive director of Open Banking Initiative, Canada, reiterated the need for open banking in Nigeria, suggesting that the Nigerian banking system needs a consumer consent model, a standard API, a central registry, and a regulatory framework.
According to him, Nigeria could start with developing a national open banking standard that fosters innovation, collaboration and one that truly enhances the culture of Nigeria while providing for the needs of the Nigerian consumer.
Rounding off the conversation, Bode Abifarin, a representative of Flutterwave, emphasized the need for fintechs to leverage open access to data to build and innovate and as well educate and engage customers.