Financial institutions

CBN advises banks and financial institutions on open banking | The Guardian Nigeria News

The Central Bank of Nigeria (CBN) has advised banks and other financial institutions to seize the opportunities represented by open banking to foster financial inclusion in the country.

On Tuesday, Ms. Aishah Ahmad, Deputy Governor of the Financial Systems Stability (CBN) Directorate, gave advice during the sixth round of Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogues in Lagos.

The News Agency of Nigeria (NAN) reports that the theme of the stakeholder conversation was: “Stimulating Innovation through Open Banking: Exploring Challenges and Opportunities for Growth”.

Open banking is the practice of sharing financial information electronically, securely and only on terms approved by customers.

It allows third-party developers to build applications and services around the financial institution, especially banks that hold customer data.

“As we all know, the pace of change in the age of information technology is much faster in the financial services industry; and that is why the world, as we know, is constantly changing, especially in the fintech space.

“As such, regulators should try to anticipate changes with complementary policies, innovative ideas and dynamic trends that will help us achieve our goals for the Nigerian payments system.

“We continue to implore regulated entities to innovate and seek out new opportunities while maintaining their resilience in the face of unforeseen challenges.

“In recent years, several emerging trends have surfaced in the fintech space, including paycheck disruption, artificial intelligence, machine learning, digital banking, big data blockchain technology, and automation of robotic processing, among others.

“One of these emerging trends is open banking. And it has caught the attention of operators and regulators because of the huge potential it holds for the financial services industry,” she said.

Ahmad, represented by Mr. Musa Jimoh, Director of Payment Systems Management, CBN, said that banks and other financial institutions are already attuned to all technological changes in this space.

She said she is delighted that the financial services sectors are adapting to the continued transformation of the fintech space, as they have always shown resilience and readiness to respond quickly to emerging issues.

According to her, we are always very proud because there are so many innovative products that Nigeria is always the first.

She said: “Our instant payment in this country ranks first among those in the world, thanks to dedicated commitments and lessons learned from previous experiences in building and implementing solutions.

“Financial institutions and banks have evolved and are now able not only to react, but also to be proactive in their transactions.

Ahmad said the apex bank, as part of its mandate for the stability of the financial system and in line with its role in deepening the financial system, had developed the regulatory framework on open banking in Nigeria, which was published in February last year.

She said it has become timely for the CBN to provide a proper framework and guidelines to regulate the practice, after observing the green integration of banks and other financial institutions with innovation in the services space. financials, and the increased adoption of integration-based application programming interfaces (APIs) in the industry.

Ahmad also said that in May 2022, the CBN released the Exposure Draft of Operational Guidelines for Open Banking in Nigeria to the public for comment.

“It is important for us to note that the framework on open banking recently released by the CBN is designed for banking and other financial services such as payment and funds transfer services, collection and disbursement,” she said.

Ahmad said the framework aimed to identify the data that could be exchanged and the corresponding API services that could be implemented and used by participants.

She said that “although the framework specifies the role of stakeholders, industry participants are permitted to develop APIs that must be open, reusable, interoperable, robust and user-centric, and generally secure.

“The opportunities presented by open banking are diverse and numerous; it serves to enhance financial inclusion, encourage improvement and promote efficiency in the financial services sector.

“These are some of the compelling cases for the implementation of open banking in Nigeria, which have convinced the CBN that this is the right way to go.”

Earlier, CIBN Chairman and Keynote Host Dr. Ken Opara said that Open Banking APIs in banking are now being adopted in over 87% of countries and regions globally.

Opara said there are more than 10,000 financial institutions worldwide with open banking implementations, as noted by LearnBonds.

“Despite the widespread adoption of open banking, it is still in its infancy, however, demand is growing.

“According to Allied Market Research, the open banking market grows by 24.4%, reaching $43.15 billion by 2026.

“Additionally, as reported on globenewswire.com, the global open banking market was valued at around $9,045 million in 2019 and is expected to grow with a healthy growth rate of over 24% over the 2020 forecast period. -2027.

“Given this projection, it has become relevant to explore in detail what the opportunities, risks and path forward for this innovation might look like,” he said.