The Central Bank of Nigeria (CBN) has been urged by banks and operators of financial technology (Fintech) companies to be more innovative in designing the framework for open banking in the country.
Dipo Fatokun, the Director of Banking and Payments System Department, who spoke at the KPMG Cyber Security Roundtable in Lagos, said the central bank would soon make public an exposure draft on open banking in the country.
Open banking is a system that provides a user with a network of financial institutions’ data using Application Programming Interfaces (APIs). The open banking standard defines how financial data should be created, shared and accessed. Open banking helps financial services customers to securely share their financial data with other institutions by relying on networks instead of centralisation.
The benefits of open banking networks include more easily transferable funds and comparing product offerings to create a banking experience that best meets each user’s needs in the most cost effective way.
Fatokun noted that after examining the open banking framework, the CBN will present regulations on what banks, fintechs and other players in the sub-sector need to do, as well as the risk management system. He said “the regulation will take sometime, it is an inter-department committee that is working on it. After they have finished, they would take it to the governors who are also very interested because they know that it is something that has to do with the stability of the financial system”.
The Director concluded by noting that “one cannot say for now when the emergency of the API framework will be issued because it is ongoing, so it is the guidelines of the cyber security we are working on for now”.