Open banking (OB) operating and governance regulations have been released by the Central Bank of Nigeria (CBN), which may result in more competition among financial service providers. The rules are designed to safeguard customers while allowing data exchange to bring cutting-edge financial goods and services to the market. To encourage innovation and increase the variety of financial products and services accessible to bank clients, the regulatory framework created norms for data exchange throughout the banking and payments sector.
According to the CBN, participants in open banking must closely adhere to security requirements while accessing and keeping data and meet minimal privacy, operational, customer experience, and risk management criteria set by the Bank. The proposed Open Banking Registry (OBR), which will be a public repository for details of registered participants to be managed by the CBN, is a key component of the framework. By ensuring that only registered institutions operate in the ecosystem, it will increase transparency in the way OB is conducted.
The rules outline the obligations, privileges, and rights of various service providers and the procedures applied along the exchange chain. The Corporate Affairs Commission (CAC) and the Nigerian Data Protection Regulation will be essential in ensuring the rule-based interaction between participants and data owners, in addition to the Central Bank of Nigeria (CBN). They will monitor adherence to data governance policies and the responsible behavior of API providers. According to the Central Bank, Nigeria’s implementation of open banking would encourage the exchange of customer-permitted data between banks and outside companies, enabling the development of customer-focused goods and services. Moreover, it aims to improve access to financial services, competitiveness, and efficiency.
The standards also provide a Consent Management structure, which requires consumers to give explicit agreement before their information is accessible for, among other things, open banking products, and services. “The Bank should offer data supervision and governance for open banking information assets for participants in the open banking arrangement to guarantee compliance with applicable legal and regulatory regulations,” the rule adds. Notwithstanding the rules, all players must adhere to all current laws on data protection, consumer rights, and ethical behavior. In data transfers, participants must ensure that consumer permission data is accurate, current, and comprehensive.
With certain financial service providers accused of breaking restrictions before the framework’s introduction, open banking has become contentious. The CBN’s regulations contain diverse subject areas, including consent management, data access regulations, key performance indicators (KPIs), anti-competition laws, data ethics, data privacy, shared information framework, data verification procedure, and information security. According to the regulator, the new period will increase financial inclusion in the nation and provide incentives for the development of pertinent financial service technologies.
