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CBN Issues New Guidelines For Open Banking

The Central Bank of Nigeria (CBN) has announced the issuance of operational guidelines for Open Banking in the country.

The new guidelines will enable the sharing of customer-permissioned data between banks and third-party firms, with the aim of creating customer-focused products and services, improving efficiency, and promoting competition in the financial sector.

This is possible with the use of technology known as Application Programming Interfaces (APIs). An API is a software that enables two apps to communicate with each other.

In a circular referenced: PSM/DIR/PUB/CIR/001/043 and dated March 7, 2023, the apex bank said the guidelines would create greater access to customer-focused data sharing between banks and third-party firms.

Titled, “Issuance of Operational Guidelines for Open Banking in Nigeria”, the circular signed by the Director, Payment Services Management Department, Musa Jimoh, said the guidelines was in furtherance of CBN’s mandate to ensure stability in Nigeria’s financial system.

It urged players recognised as the API Providers (APs) and API Consumers (ACs) not to breach data agreements linked to customers.

The CBN described APs as participant that uses API to avail data or service to another participant.

An API Provider can be a licensed financial institution/service provider, a Fast-Moving Consumer Goods (FMCG) Company or other retailers, Payroll Service Bureau.

It noted that ACs are participants that use API released by the (API) providers to access data or service. An API Consumer can be a licensed financial institution/service provider, an FMCG or other retailers, Payroll Service Bureau etc.

The CBN said to provide for a safe ecosystem, it would, through its Open Banking Registry, ensure that only registered institutions participate within the open banking ecosystem.

The circular reads: “The Central bank of Nigeria (CBN) in furtherance of its mandate for the stability of the financial system and pursuant to its role in deepening the financial system hereby issues the Operational Guidelines for Open Banking in Nigeria.

“The adoption of Open Banking in Nigeria will foster customer permissioned data between banks and third-party firms to enable the building of customer-focused products and services.

“It is also aimed at enhancing efficiency, competition and access to financial services in Nigeria.

“All stakeholders are required to ensure strict compliance with the guidelines and all other regulations, as the CBN continues to monitor developments and issue guidance as may be appropriate.”

Open Banking enables the sharing of customer-permissioned data between banks and third-party firms. This system allows banks to securely share their customer data with third-party companies, such as fintechs and other financial service providers, with the consent of their customers.

This sharing of data is done through Application Programming Interfaces (APIs), which act as a bridge between the bank’s systems and those of the third-party firms.

Once a customer gives their consent for their data to be shared, the third-party firm can access their data through the bank’s APIs. This data includes information about the customer’s transactions, account balances, and other relevant information. The third-party firm can then use this data to develop innovative products and services that are tailored to the customer’s needs.



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