Afrigather This text was contributed to TechCabal by Adedeji Olowe and Ope Adeoye
Nigeria started its open banking journey in 2017, spearheaded by a coalition of trade stakeholders advocating for larger monetary innovation and inclusion. This mirrored the UK’s pioneering efforts underneath the Basic Knowledge Safety Regulation) GDPR and the Second Fee Companies Directive (PSD2), which sought to ascertain open banking.
Within the UK, open banking was initially used as a regulatory device by the Competitors and Markets Authority (CMA) to create a degree taking part in subject among the many nation’s 9 largest banks. Whereas open banking served as a remediation device within the UK, it had the potential to be transformational in Nigeria.
Recognising this, Adedeji Olowe and a bunch of trade specialists based Open Banking Nigeria on June 1, 2017, marking the start of open banking in Africa. Though this journey has taken seven years as a substitute of the anticipated three, we at the moment are approaching its completion.
Alongside the way in which, many have requested, “Who’re the stakeholders of Open Banking Nigeria?” and a few are unclear on what open banking actually entails.
Open banking is an innovation with the potential to remodel any area the place it’s adopted. Nevertheless, it comes with its complexities. When you ask twenty specialists to outline open banking, you’ll seemingly get twenty completely different solutions. This range of views is anticipated as a result of open banking addresses completely different issues for various folks.
Open banking in Nigeria marks a brand new period of innovation, empowering clients to grant fintechs and monetary establishments entry to their info. When the phrase “digital fee” is talked about, many Nigerians typically assume “we now have seen sufficient.” But, regardless of the development in digital funds, Nigeria has solely simply begun and barely scratched the floor.
To the matter at hand, who’re the stakeholders driving these modifications and making open banking a actuality? We’ll dive deep into the completely different stakeholders, inspecting their contributions to open banking and understanding their roles and motivations.
Regulators
Regulation is the spine of any profitable open banking initiative. Even the UK—the pioneers of open banking—needed to create a framework to information its existence. With out regulation, open banking can not perform successfully wherever.
Central Financial institution of Nigeria (CBN)
The Central Financial institution of Nigeria (CBN) is the apex regulator of the Nigerian banking ecosystem and has been instrumental in shaping open banking within the nation. The CBN formulated the open banking rules and operational pointers and continues to drive its implementation by collaborating with numerous stakeholders to standardise practices. Whereas the CBN oversees the Open Banking Registry (OBR), it has delegated the duty for its implementation and operationalisation to the Nigeria Inter-Financial institution Settlement System (NIBSS).
Nationwide Knowledge Safety Fee (NDPC)
The Nationwide Knowledge Safety Fee (NDPC) is the first regulator for knowledge privateness in Nigeria with the Nigeria Knowledge Safety Regulation (NDPR). NDPR is the inspiration on which open banking sits. The NDPR underpins the flexibility of finish customers to entrust API Customers (AC) to have entry to their knowledge. They govern how knowledge of each Nigerian is dealt with, shared and guarded. And with out them, open banking is certain to fall quick and entwined with a ton of regulatory mishaps.
Securities and Change Fee (SEC)
The Securities and Change Fee (SEC) is the regulatory physique for the capital market in Nigeria and it offers steering for open finance which can embrace using open banking as a part of modern transformation of the capital market. Within the close to future, SEC hopes to make use of open banking to champion open finance. Supported by influential figures similar to Aigboje Aig-Imoukhuede and the late Herbert Wigwe alongside different distinguished trade leaders, the SEC is diligently working to craft rules and insurance policies that can pave the way in which for a brand new period of open finance.
Nigeria Interbank Settlement System (NIBSS)
The Nigerian Interbank Settlement System (NIBSS) is the shared providers created by the CBN and industrial banks. It integrates all banks and CBN-regulated fintechs. NIBSS is a important driver of open banking in Nigeria as they’re mandated by the CBN to function the Open Banking Registry (OBR) and the Open Banking Consent Administration System (OBCMS) on behalf of the trade.
OBCMS is a FAPI grade know-how platform that finish customers use to supply consent to AC by way of their banks. The OBCMS is operated by NIBSS on behalf of the CBN and the Nigerian banks and makes use of the BVN to confirm finish customers.
OBN ecosystem facilitators
The OBN ecosystem brings collectively the important thing forces behind Nigeria’s open banking revolution. From regulators and conventional banks to fintech innovators and finish customers.
Open Banking Nigeria
The Open Know-how Basis, higher generally known as the Open Banking Nigeria (OBN), is the foremost entity for open banking in Nigeria. Based in 2017, it’s a non-profit organisation with membership from main banks, fintechs, and world consultancy in Nigeria. The staff kickstarted the open banking revolution in Nigeria and has labored with the CBN and different stakeholders to formulate operational pointers.
OBN can be liable for driving trade advocacy, growing the API requirements, documenting these requirements, and growing an open supply API gateway for the monetary trade in Nigeria.Typically mistaken for regulators as a result of their title and typically seen as an organization due to their polished presentation. OBN truly represents a various community. It contains main fintechs throughout Africa and distinguished Nigerian banks. To call only a few: Sterling Financial institution, Constancy Financial institution, FCMB, Sparkle Financial institution, KPMG, PwC, EY, Paystack, Flutterwave, OnePipe, Lendsqr, Moniepoint (previously TeamApt) and a bunch of others.
Conventional Banks (API Suppliers)
Conventional banks are pivotal gamers within the open banking ecosystem, also known as open banking API suppliers. They provide APIs that allow different monetary establishments to entry and combine knowledge. As regulated entities, these API Suppliers (APs) facilitate the move of information and providers to a different participant. A supplier is generally a financial institution or every other entity whose clients share their knowledge or grant entry to their accounts to different individuals.
Banks are vying to take the lead in shaping the way forward for open banking throughout Africa. It’s no secret that banks stand to be among the many greatest winners on this transformation as they maintain the important thing to the coveted monetary knowledge that everybody must entry.
As one of many main funders of the Open Banking Nigeria (OBN) initiative, Sterling Financial institution stands out as a key participant in Nigeria’s Open Banking motion, with the CEO and Director taking part in an energetic half in propagating the gospel of open banking. Sparkle Financial institution additionally stands out as a significant advocate for open banking, with CEO Uzoma Dozie main the cost. Dozie, an ardent supporter of OBN, has a confirmed monitor document of remodeling the monetary sector by know-how, notably throughout his tenure as CEO of the defunct Diamond Financial institution.
Fintechs (API Customers)
Fintechs on this context are divided into two classes: the licenced ones and people with out a licence.
The primary are known as API shoppers and are uniquely authorised to attach and devour open banking APIs. As regulated entities, API shoppers (AC) use API launched by the suppliers to entry knowledge or service and use this to serve their clients. A typical AC can be a fintech similar to a Fee Options Service Supplier (PSSP) or Swap that connects to an AP (a financial institution) to view buyer knowledge or transactions with consent.
Open banking in Nigeria boasts a various array of fintech companions, with practically each key participant within the sector concerned. A few of these key gamers embrace: OnePipe, based by Ope Adeoye, a trustee at OBN; Paystack, with Khadijah Abu additionally on OBN’s board of trustees; Mono, identified for its experimentation with open banking within the type of open APIs; Lendsqr, ready to utilise open banking to drive credit score in Africa; Flutterwave, TeamApt, amongst others.
Finish customers
Finish customers are the shoppers of an API supplier who want for a third-party—an API Client or one other buyer of an AC—-to entry their financial institution accounts for the aim of information sharing or delegated and authorised transactions.
There are a number of tiers of finish customers. On the grassroot degree, each Nigerian with a checking account is an finish consumer. On the nationwide degree, firms like Piggyvest, Bamboo and different monetary establishments can use knowledge to remodel how they do enterprise when open banking goes stay. On a world scale, firms like Ceviant may also key into open banking to enhance their treasury administration.
Different key advocates, trade associations and stakeholders
The open banking motion in Nigeria can be gaining momentum due to the devoted efforts of quite a few advocates and trade associations. Another key stakeholders driving this initiative that we should not fail to say embrace:
Committee of eBanking Heads in Nigeria (CeBIH)
CeBIH is a distinguished affiliation comprising the heads of e-banking in Nigerian banks. They work collaboratively to advertise the adoption and integration of e-banking providers together with open banking. Their efforts are targeted on making a seamless digital banking expertise for patrons and fostering innovation throughout the banking sector.
West African Bankers Affiliation (WABA)
WABA is a regional physique representing banks and monetary establishments throughout West Africa. They play an instrumental function in advocating for insurance policies and frameworks that help open banking and monetary inclusion. WABA’s involvement ensures that Nigeria’s open banking initiatives are aligned with regional requirements and practices, facilitating cross-border integration and collaboration
Fintech associations
Varied fintech associations in Nigeria are actively concerned in driving open banking. These associations carry collectively fintechs, startups, and innovators who’re on the forefront of growing new applied sciences and options for the monetary trade. Their contributions are very important in shaping the open banking ecosystem by introducing cutting-edge applied sciences and fostering collaboration between conventional banks and fintechs.
Open banking’s promising future
The journey that started in 2017 is nearing a major milestone, but it surely’s essential to recognise that that is only the start. Because the ecosystem matures and evolves, the continued cooperation and innovation from all stakeholders will likely be essential in making certain that open banking fulfills its potential in Nigeria and probably serves as a mannequin for different African nations.
This bold initiative, impressed by world precedents and tailor-made to Nigeria’s distinctive wants, has concerned a various vary of stakeholders, every contributing to the evolving ecosystem. From the Central Financial institution’s regulatory framework and NIBSS’s technological infrastructure to the pioneering efforts of Open Banking Nigeria (OBN) and the collaborative spirit of fintechs and conventional banks, each participant has had a significant function in its continued success, and shaping the way forward for open banking.
The journey is much from over. With continued dedication and collective effort, the imaginative and prescient of a extra accessible and dynamic monetary ecosystem is inside attain.
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Adedeji Olowe is a Trustee of Open Banking Nigeria and an advocate of monetary inclusion, client credit score, and open APIs in Africa.
adedeji@openbanking.ng
Ope Adeoye is the founding father of OnePipe and in addition a Trustee of Open Banking Nigeria
ope@openbanking.ng
