Open banking plays a major role in the fintech landscape by paving the way for enhanced accessibility, improved control over financial data, and a surge in financial inclusion, said David Adeleke, co-founder/CEO at Zeeh Africa.
“The financial sector in Nigeria is on a transformational journey with the entrance of open banking, an innovative approach encouraging collaboration among financial institutions through APIs (Application Programming Interfaces),” he said.
According to him, this shift will redefine financial experiences for millions, offering improved accessibility and enhanced control over financial data.
2017 the open banking regulation was initially proposed when industry experts formed Open Banking Nigeria. In 2021, the Central Bank of Nigeria (CBN) released a regulatory framework for open banking.
The following year, the CBN issued the regulatory framework guidelines for open banking. And on March 7, 2023, the apex issued operational guidelines for open banking in Africa’s largest economy. This made Nigeria to become the first African country to adopt the regulation.
Zeeh Africa has emerged as a driving force in this evolution, offering services ranging from Know Your Customer (KYC) verification to financial insights, payment infrastructure, and developer-friendly APIs.
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This comprehensive suite of services ensures the authenticity of borrower identities and contributes to the development of secure and innovative financial solutions for businesses.
Adeleke emphasised that open banking places control over financial data firmly in the hands of individuals, mitigating risks associated with data breaches and identity theft. Also, Zeeh Africa, through its role in KYC verification services, plays a crucial part in empowering customers by ensuring the security of their financial transactions.
“The introduction of open banking goes beyond benefiting consumers, it fosters healthy competition among financial institutions. This competition, fueled by the collaboration encouraged by open banking, invites new players into the market, leading to the development of innovative products and services. Customers can expect better pricing, enhanced customer service, and superior financial solutions as a result,” he said.
According to Enhancing Financial Innovation and Access data, the county’s financial inclusion rate grew to 64.1 per cent in 2020 from 63.2 per cent in 2018.
The 2020 figure is below the CBN’s 80 per cent financial inclusion target for 2020.
Although the inclusion rate dropped marginally from 36.8 per cent in 2018 to 35.9 per cent in 2020, the excluded adult population of 38.1 million reported in 2020 was higher than the 36.6 million recorded in 2018, meaning 1.5 million adults fell into the exclusion circle in the last two years to 2020.
The World Bank’s 2021 global index report also showed that Nigeria’s banked population increased by 15.6 percentage points to 45.3 percent. This implies that almost 56 per cent of Nigerians are unbanked.
With only 27 per cent of Nigerians being financially healthy, financial inclusion continues to be a challenge in Nigeria, but fintechs are pivotal in addressing it, a report by the Open Technology Foundation said.
It said, “Through their technology-driven approach, Nigerian Fintechs are making financial services accessible to the unbanked and underbanked populations.”
However, Adeleke stressed that the key area where open banking is set to make a significant impact is in credit assessment.
He said, “By providing lenders with access to a broader spectrum of borrower data, Zeeh Africa and similar institutions contribute to Nigeria’s revolutionisation of credit scoring. This, in turn, enhances the accuracy of credit scores, mitigates default risks, and facilitates improved credit access for individuals and small businesses.”
“Embracing the future responsibly, Zeeh Africa has positioned itself as a pioneer in secure implementation, boasting robust data infrastructure and efficient KYC verification services. This commitment empowers customers with secure financial transactions and personalised experiences, marking a new era of financial empowerment and inclusion in Nigeria,” he added.
