Legal | Policy Insight.
The Open Banking system utilises open technologies that permit third-party providers (TPPs) to develop services and applications around financial institutions providing end-users the ability to review all their banking and financial information such as inflows, outflows, balances, and due liabilities in a central location. Thus, Open Banking is the exchange of consumer data between banks and other Financial Service Providers (FSPs) on the basis of a Customer’s consent with other FSPs and TPPs.
With Fintech in Nigeria thrusting the envelope of traditional banking and the growing integration of banks and other financial institutions including the increasing adoption of API-based integration rapidly revolutionising the financial services landscape.
On February 17, 2021, the CBN issued a regulatory framework for open banking in Nigeria which aims to enhance financial inclusion, improve competition within the financial services space, foster the sharing and leveraging of customer-permission data by banks with third-party firms to devise solutions and services that provide efficiency, enhance financial transparency and create options for account holders across Nigeria to interact within the financial system.
Thus, the provision of an enabling regulatory environment for innovative and customer-centric financial service through safe utilisation and exchange of data and service is the main crux of open banking.
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Oluwayemisi Adeluoye | Research Analyst, Banking and Finance | firstname.lastname@example.org