Nigeria to pioneer Open Banking in Africa, joins UK, others
Nigeria has signified a strong desire to become the first country in Africa and the second in EMEA after Bahrain to officially adopt an Open Banking standard. This defines how financial data are created, shared and accessed a system, which also provides users with a network of financial institutions’ data through the use of a standard Application Programming Interface (API).
The Central Bank of Nigeria (CBN) recently made this indication as it made public a Request for Information into its Payment Systems Vision (PSV) 2030, which would ‘define the strategic agenda for the Payments System for the next 10 years.’ It comes on the heels of its successful Payments System Vision PSV2020 that wraps up at the end of this year.
If Nigeria scales through in good time with the implementation of PSV 2030, central to which is Open Banking now being considered by the country’s highest banking regulator as one of the top global trends and new practices in payments, the country would enact policies to ensure the speedy adoption of Open Banking across its financial services industry.
With this, Nigeria would join other countries like Canada, Australia, and New Zealand, among others, that have followed the footsteps of the UK in developing and adopting a single API standard, for their respective financial ecosystems.
According to Nigeria’s central bank, PSV 2030 is necessary because of the importance of having a strategy that is relevant for the Nigerian market domestically and for regional and global markets where Nigeria plays a role in international flows.
“Our goal is a payments system that is not only nationally utilized but also internationally recognized; one that promotes efficiency supports innovation while also anticipates and manages the risks from the adoption of new technologies,” Aisha Ahmad, deputy governor of the CBN, said.
For a while, advocacy for Open Banking in Nigeria has been led by the Open Technology Foundation, also known as Open Banking Nigeria, a non-profit founded by payment industry veteran and open banking evangelist, Adedeji Olowe.
Open Technology Foundation partners Ernst & Young, KPMG, and PwC. It also has some of Africa’s top fintechs including Africa’s Talking, Flutterwave, Paystack and Teamapt. Through its advocacy, the Open Banking Foundation has facilitated the drafting of the alpha version of the API standard and is on course to deliver a sandbox by Q3 of 2019.
Speaking at a recent industry event, Olowe highlighted the need for players within the financial services industry in Nigeria to adopt an Open Banking standard. “It is essential never to lose sight of the chief beneficiary of our advocacy. Beyond the benefits that would accrue to the economy in Nigeria, which would of course trickle to other countries on the continent and to the players in our financial services industry, the ultimate beneficiary is the customer, without whom no business would exist.”
For its payment vision for the next decade, along with Open Banking, Nigeria is also considering other payment trends such as digital access, distributed ledger technology, payment methods, big data and artificial intelligence, cyber-security, digital identity, and machine learning and robotics process automation.
With the Central Bank of Nigeria ready to set the pace for the African continent, it is likely that with the country serving a reference point more countries in Africa would take active steps towards adopting Open Banking Standards as might be applicable for their respective economies and ecosystems.
Increasingly, the financial climate across Africa in the next decade would be driven by rapid changes driven by advances in digital technology, customer expectations and new business models which includes Fintech, much more than they did in the last decade.