CBN Issues Guidelines On Open Banking

The Central Bank of Nigeria (CBN) has issued operational guidelines for open banking in the country.

CBN Issues Guidelines On Open Banking

Open banking is a financial concept that allows third-party financial service providers to access banking data using APIs with the customer’s explicit consent.

This concept also allows customers to share their banking data with other financial service providers, enabling them to access a broader range of products and services.

CBN said it developed the guidelines in collaboration with industry stakeholders.

CBN director of the payment services management department, Musa Jimoh, in a memo said the guidelines aim to promote stability in Nigeria’s financial system.

“The adoption of Open Banking in Nigeria will foster customer permission data between banks and third-party firms to enable the building of customer-focused products and services,” the memo read.

“It also aims to enhance efficiency, competition and access to financial services in Nigeria.

“All stakeholders are required 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.”

The CBN guidelines specified the responsibilities of different entities participating in open banking as well as the processes involved in the chain of exchange.

“Entities participating in Open banking shall be categorised based on the following roles. Participants shall assume a role depending on the services:
i. API Provider (AP): This refers to a participant that uses API to avail data or service to another participant. An API Provider can be a licensed financial institution/service provider, a Fast-Moving Consumer Goods (FMCG) Company or other retailers, Payroll Service Bureau etc,” the apex bank said.

“ii. API Consumer (AC): This refers to a participant that uses API released by the (API) providers to access data or services. An API Consumer can be a licensed financial institution/service provider, an FMCG or other retailer, Payroll Service Bureau etc.

”iii. Customer: This refers to the data owner that shall be required to provide consent for the release of data for the purpose of accessing financial services.”

The CBN also said it would provide and maintain an open banking registry (OBR) for the industry.

It said the OBR would be a public repository for details of registered participants.

The CBN said the OBR would be maintained for the purpose of providing regulatory oversight on participants, enhancing transparency in the operations of open banking and ensuring that only registered institutions operate in the ecosystem.

“Each participant shall be identified by its CAC business registration number, which shall be the unique key across the OBR system,” The CBN said.

“The OBR shall maintain an API interface, defined within these guidelines, which shall serve as the primary means by which API (Application Programming Interface) providers manage the registration of their API consumers.”

The apex bank said customers would be required to provide explicit consent for the use of their data.

It said customers’ consent should be obtained in the same form the agreement was presented and a copy of the consent of the customer shall be made available to the customer and preserved by the participant.

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