By Clara Nwachukwu
The Central Bank of Nigeria (CBN), yesterday, issued the operational guidelines for open banking in the country, in efforts to enhance competition and innovation in the banking system.
Open Banking is the practice of enabling secure interoperability in the banking industry by allowing third-party payment service and other financial service providers to access banking transactions and other data from banks and financial institutions.
CBN, in a circular titled: Issuance of the Operational Guidelines for Open Banking in Nigeria, with reference: PSM/DIR/PUB/CIR/001/043, said the move is “in furtherance of its mandate for the stability of the financial system and pursuant to its role in deepening financial system.
The circular, addressed to all Deposit Money Banks, DMBs, Mobile Money Operators (MMOs) and Payment Service Providers (PSPs), was signed by the Director, Payments System Management Department, CBN, Musa Jimoh.
The circular reads further: “The adoption of Open Banking in Nigeria will foster the sharing of 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.”
The apex bank also advised all stakeholders “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.”
Participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy, operational, customer experience and risk management standards as prescribed by the Bank.
The 68-page guidelines also stipulated the objectives, registry, accreditation, consent management, responsibilities of providers and consumers, access rules, problem management and a host of others.
Under the guidelines, “Any organization that has data of customers which may be exchanged with other entities for the purpose of providing innovative financial services within Nigeria shall be eligible to participate in the Open Banking ecosystem.
“Participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy, operational, customer experience and risk management standards as prescribed by the Bank.”
According to the apex bank, it recognises the existence of an ecosystem for Application Programming Interface (API) in the financial and payments system, and is aware of various efforts in the industry to develop acceptable standards among stakeholders.
Accordingly, it explained that “The Bank, in collaboration with industry stakeholders, developed Operational Guidelines for Open Banking in line with the provisions of the Regulatory Framework. In view of this, the Bank hereby issues the Operational Guidelines for Open Banking in Nigeria.”
