Nigeria’s Central Financial institution (CBN) has accredited the launch of open banking, mandating that banks start sharing buyer knowledge with different monetary establishments beginning in August 2025, in keeping with one individual with direct information of the assembly. Nigeria turns into the primary African nation to implement open banking, 4 years after the Central Financial institution of Nigeria first launched its regulatory framework for the initiative.
With the CBN’s approval, prospects can now consent to permit regulated monetary establishments to entry their knowledge, resembling account balances, transaction histories, and spending patterns, and, in some instances, even provoke transactions on their behalf.
The information will likely be shared by a standardised API that every one banks and taking part establishments can connect with, enabling safe and constant entry. A central registry will determine and authenticate all members, whereas a consent administration framework tied to prospects’ Financial institution Verification Numbers (BVNs) will be certain that prospects stay in full management of who can entry their knowledge and for what objective.
The CBN revised its method after pushback from the banking trade towards centralising management beneath the Nigerian Interbank Settlement System (NIBSS). It has now established unbiased committees to supervise open banking, led by bankers and staff of monetary establishments with out direct CBN management over any of the committees.
The significance of open banking can’t be overstated. By accessing years of information on Nigeria’s 120 million financial institution prospects, monetary establishments can use this knowledge to supply new providers to Nigerians.
The probably service to enhance with entry to knowledge is lending. To this point, bank-led lending has resulted in low credit score penetration, with as a lot as 70% of checking account holders locked out from accessible credit score. FIntechs have entered the credit score market to repair this regardless of having restricted knowledge, resulting in a blended bag of subprime loans and predatory assortment strategies.
With open banking, lending fintechs would obtain knowledge (transaction historical past, consumption patterns) from banks to evaluate creditworthiness and in addition assist create a much-needed credit score rating for Nigerians. Monetary establishments can even create new forms of personalised monetary merchandise backed by knowledge.
*It is a creating story.