CBN moves to regulate Open Banking in Nigeria

CBN moves to regulate Open Banking in Nigeria

CBN moves to regulate Open Banking in Nigeria


 

The Central Bank of Nigeria (CBN) in line with its mandate to promote financial system stability has issued the Regulatory Framework for Open Banking in Nigeria.

The framework establishes principles for data sharing across the banking and payments ecosystem, which will promote innovation, broaden the range of financial products and services, and deepen financial inclusion.

The regulatory framework obtained from the financial institution on Thursday, stipulates, amongst others, data and Application Programming Interface (API) access requirements, principles for API, data, technical design and information security specifications.

According to the CBN, having observed the growing integration of banks and other financial institutions with innovators in the financial services space and the increasing adoption of Application Programming Interface (API) based integrations in the industry, it has become expedient for the Bank to provide appropriate framework to regulate the practice.

“The opportunities presented by Open Banking for enhancing financial inclusion, improving competition in the financial services space and promoting efficient services are compelling cases for the implementation of Open Banking in Nigeria.

“The Bank is committed to adopting beneficial international standard practice in the Nigerian Banking Industry with due cognisance given to risk management and applicability in the Nigerian environment.

“Therefore, the Bank hereby issues the Regulatory Framework for Open Banking in Nigeria to foster the sharing and leveraging of customer-permissioned data by banks with third party firms to build solutions and services that provide efficiency, greater financial transparency and options for account holders and to enhance access to financial services in Nigeria,” the framework  reads.

Stating that operational guidelines related to the framework will be communicated in due course, the apex bank said it will continue to monitor industry developments and issue further guidance as appropriate.

OBJECTIVES

The objectives of this framework are as follows:

  • To provide an enabling regulatory environment for provision of innovative and customer-centric financial services through the safe utilisation and exchange data and services;
  • To define risk based data access levels and service categorisations towards effective management of risk in the operation of open API;
  • To outline baseline requirements and standards for the exchange of data and services among participants in the financial services sector;
  • To provide risk management guidance for operators in the financial services space for leveraging data and APIs in the provision of financial services;
  • To promote competition in banking and other financial services and enhance access to financial services.

SCOPE

The framework is specifically for banking and other related financial services as follows:

  1. Payments and remittance services
  2. Collection and Disbursement services
  3. Deposit-taking
  4. Credit
  5. Personal finance advisory and management
  6. Treasury Management vii. Credit ratings/scoring
  7. Mortgage
  8. Leasing/Hire purchase
  9. Other services as may be determined by the Bank