Global professional services firm, Ernst & Young (EY) has joined the list of organisations advocating for a standard Application Programming Interface (API) for Nigeria’s financial services industry.
This followed an announcement on Wednesday by Open Banking Nigeria, the foremost advocate of open banking in the country, that it has sealed an agreement with EY. The agreement ushers EY into the ranks of other leading financial services stakeholders analysing the need of the industry for a common API standard among banks and other financial institutions, support the development of API standards, promote adoption with stakeholders – players and regulators – and enable further innovations in Nigeria’s financial services industry.
Application Programming Interface (API) refers to a set of routines, protocols, and tools for building software applications. An API allows an application to communicate with another application, or an operating system, database, network, etc. For instance, Google Maps API allows an application to integrate third party content, such as restaurants overlaid on a Google Map. A modern application is typically built on top of many APIs, where some of these can also depend on further APIs.
Advocates like Open Banking Nigeria, believe that the introduction of a unified API across financial institutions creates a foundation upon which data can be effortlessly accessed and securely shared, real-time. A unified API would among others, empower individual and corporate users of services within the payment ecosystem to instruct their service providers to share their bank balance and transaction information with regulated Account Information Service Providers (AISPs).
This interoperability would result in the development of modern payment services, cost savings for operators and increased innovation while also guaranteeing information security and privacy, which would not cause an uneven playing field for industry players.
“We understand that customers also expect more convenience and flexible access to services, driven by broader digital experience and emerging technology,” Dapo Adewole, partner, Technology Advisory, at EY said in a statement. “It is our desire to bring this goal to fruition, while working with other players in the industry.”
Open Banking seeks to create a system in which customer data can be easily, yet securely, accessed by different providers. The membership of Open Banking Nigeria has been growing and now includes companies like 2iLab, Africa’s Talking; Flutterwave; Forloop; Global Accelerex; Heritage Bank; Kinexus; Netplus; Open Vector; Paystack; PwC; TeamApt; and Wallet.ng among others.
Adeoye also noted that EY’s membership would lead to the development of the nest generation of API standard for the Nigerian financial services industry.
Already acknowledged as the future of banking on the globe, the adoption of Open Banking in Nigeria would enhance the service offerings of players in the financial services industry, improve customer engagement and build new digital revenue channels. It would also transform the operation of other industries, including telecommunications, power, hospitality, retail, and insurance, seeking to leverage data for the improvement of their operational scope and service offerings to clients.
In Nigeria the Open Banking movement is gaining momentum. The Central Bank of Nigeria (CBN) has at several forums indicated willingness at promoting Open Banking in the country. Most recently, during the unveiling of the new roadmap for his second term, Godwin Emefiele, governor of the apex bank revealed that priority will be giving to Open Banking in the development of the Payment Systems Vision PSV 2030 as it considers the concept as one of the top global trends and new practices in payments that have been deployed in other countries which must be considered in Nigeria.