The Central Bank of Nigeria introduced Open Banking, which is a financial concept providing third-party financial service providers access to customer financial information and transaction data through secure APIs provided by banks and other financial institutions, thereby allowing third-party providers to create unique financial products and services customized to individual customers’ requirements. The Open Banking initiative was launched by the CBN in 2018 to promote financial inclusion and innovation in Nigeria’s ever-growing FinTech space. This article focuses on the solutions provided by Open Banking in Nigeria.
Content Recap:
What are the Open Banking Guidelines in Nigeria?
The guidelines are detailed in the official release of the Central Bank of Nigeria. Click here to download/view.
Who are the parties involved in Open Banking in Nigeria?
The table below showcases all the parties involved in the Open Banking ecosystem, each playing its role in delivering fast and efficient services to end customers.
Why is Open Banking Important?
Open Banking in Nigeria provides numerous solutions that can benefit both businesses and consumers. Some of its advantages include:
Improved Access to Financial Services
Open Banking provides third-party financial service providers access to customer data, enabling them to create innovative financial products and services. Thus, it can improve access to financial services for businesses and consumers previously excluded from the formal financial system.
Enhanced User Experience
Open Banking enables customers to share their financial data quickly and securely with third-party providers, enhancing the user experience and making it easier to manage finances.
Increased Competition
Open Banking leads to new entrants into the financial services industry, promoting competition and reducing costs, ultimately benefiting businesses and consumers.
Better Risk Management
Open Banking allows banks and other financial service providers to assess the creditworthiness and risk profile of potential customers accurately, leading to more accurate credit decisions and improved risk management.
Faster Payments
Open Banking facilitates faster and more efficient payments by enabling third-party providers to initiate transactions on behalf of customers, reducing transaction times and increasing the speed of settlements.
Conclusion
Overall, Open Banking in Nigeria will drive financial innovation, improve access to financial services, and enhance the customer experience.