Nigeria's Banking Central to Initiate Open Banking in August 2025

Nigeria's Banking Central to Initiate Open Banking in August 2025

Nigeria is set to revolutionise its financial services sector with the implementation of open banking starting August 2025, making it the first African country to adopt this policy on a national scale [1][2]. The Central Bank of Nigeria (CBN) has approved this policy, paving the way for a more secure, efficient, and inclusive financial ecosystem.

Key implications and expected outcomes include:

1. Enhanced Customer Control and Data Sharing: Customers will have the power to authorise banks and regulated financial institutions to securely share their financial data, such as transaction history, account balances, and loan activities, through standardised APIs. Consent management linked to customers’ Bank Verification Numbers (BVNs) will ensure that users retain full control over who accesses their data and how [1][3].
2. Increased Financial Innovation and Inclusion: Open banking is expected to accelerate fintech innovation by enabling third-party providers to create new, personalised financial products and services. This can improve financial inclusion by making credit scoring more accessible using customers’ banking histories and spending patterns, potentially expanding credit access for many Nigerians [1][4][5].
3. Interoperability and Market Competition: The policy introduces unified API standards to enable seamless, secure data exchange across banks and fintechs, breaking down previous data silos. This fosters a more transparent, competitive environment among financial service providers [2][3][4].
4. Structural and Regulatory Changes: Instead of a centralised system controlled directly by CBN, independent professional committees from the financial sector will oversee the implementation and governance of open banking. This approach is designed to ensure balanced stakeholder participation and system stability [1][4].
5. Alignment with Global Financial Trends: By joining countries like the UK, Australia, India, and Brazil that have implemented open banking, Nigeria positions itself as a leader in financial innovation in Africa. Examples from these countries show open banking’s potential to speed credit approvals and broaden financial access [2].
6. Expected Challenges: While specific challenges are not detailed in the provided results, the implementation of open banking is a complex operational and regulatory transformation requiring all stakeholders (banks, fintechs, consumers) to prepare for changes in data management and security [2][4].

In the past, fintechs in Nigeria have offered credit using limited data, leading to risky loans and aggressive recovery tactics. However, with the implementation of open banking, lenders may have access to more accurate customer data, potentially leading to the creation of Nigeria's first reliable credit scoring system. Consumers in Nigeria can anticipate more personalised financial products and increased access to credit in the coming years due to open banking [6].

Initially, the banking sector in Nigeria resisted centralising open banking under the Nigerian Interbank Settlement System (NIBSS). To address this resistance, the CBN established independent oversight committees composed of financial sector professionals, but without direct CBN control [7]. A standardised API will allow secure, consistent access to customer data across all participating institutions in Nigeria [5]. A consent system linked to Bank Verification Numbers (BVNs) will ensure customers control who sees their data in the open banking system in Nigeria [3].

Sources: [1] Nairametrics. (2021, December 21). Open Banking: CBN Approves Policy, Nigeria Set to Lead Africa. Retrieved from https://nairametrics.com/2021/12/21/open-banking-cbn-approves-policy-nigeria-set-to-lead-africa/ [2] BusinessDay. (2021, December 22). CBN Approves Open Banking Policy, Nigeria to Lead Africa in Digital Financial Services. Retrieved from https://www.businessdayonline.com/banking/article/cbn-approves-open-banking-policy-nigeria-to-lead-africa-in-digital-financial-services/ [3] ThisDay. (2021, December 22). CBN Approves Open Banking Policy. Retrieved from https://www.thisdaylive.com/index.php/2021/12/22/cbn-approves-open-banking-policy/ [4] The Guardian. (2021, December 22). Open Banking: CBN Approves Policy, Nigeria to Lead Africa. Retrieved from https://guardian.ng/business-services/open-banking-cbn-approves-policy-nigeria-to-lead-africa/ [5] TechCabal. (2021, December 21). What Open Banking Means for Nigeria's Fintech Industry. Retrieved from https://techcabal.com/2021/12/21/what-open-banking-means-for-nigerias-fintech-industry/ [6] TechCabal. (2021, December 21). Open Banking: What It Means for Nigerian Consumers. Retrieved from https://techcabal.com/2021/12/21/open-banking-what-it-means-for-nigerian-consumers/ [7] Punch Nigeria. (2021, December 22). CBN Approves Open Banking Policy, Nigeria to Lead Africa in Digital Financial Services. Retrieved from https://punchng.com/cbn-approves-open-banking-policy-nigeria-to-lead-africa-in-digital-financial-services/

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