Experts’ Views on Open Banking Evolution in Nigeria

Experts' Views on Open Banking Evolution in Nigeria

The top brass in the digital financial services on March 24, called for a unified effort at advancing open banking in Nigeria. The call was made at a webinar convened by the Committee of e-business Industry Heads (CeBIH), where persons in the upper echelon of electronic banking departments in the Nigerian banks and financial technology sector (fintech) hashed out different thoughts on open banking.

CeBIH which is chaired by Mr. Adeyemi Atanda, found the webinar a worthy platform to respond to technological innovations in banking and the need to increase economic growth and quality of life of the consumers.

The Special Guest of Honour, Mr. Abubabakar Sulaimon, MD, Sterling Bank Plc, speaking
at the event moderated by Mrs. Folashade Femi-Lawal, Secretary, CeBIH Emerging Payments, while setting the tone for the discussion, said open banking is the new face of banking and that conversation should be more on making data available in the banking space. He further stated that consumers must be protected from arbitrariness and also be allowed to enjoy value in banking relationship as against the full harvest of value being enjoyed by banks only.

Keynote speakers at the event include the MD, Nigeria Interbank Settlement System (NIBSS),
Mr. Premier Oiwoh; Director, Payments System Management (CBN), Mr. Musa Itopa Jimoh;
Trustee, Open Technology Foundation Nigeria,
Co-founder/CEO, Flutterwave, Mr.Adedeji Olowe; Chair/ED, Open Banking Initiative, Canada, Mr. Christian Clapton and the Chief Digital Officer, Wema Bank and immediate past Chairman of CeBIH, Mr. Dele Adeyinka.

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Adeyinka in describing open banking quoted Bill Gates as saying, “banking is necessary but banks are not”. He referred to open banking as an ecosystem in where banks share data with regulated third party, citing PLAID, an API interface which is valued at $2.7 billion and attracted investments from venture arm of Goldman Sachs as connecting thousands of apps and helps consumers develop a complete picture of financial data.

Jimoh who was represented by Ms. Aisha Isa Latinwo, Assistant Director, Payment Systems, (CBN), explained the position of the regulatory institution on open banking making reference to the regulatory framework for open banking in Nigeria which stipulates the sharing of data and Application Programming Interface (API) access requirements, principles for API, data, technical design, and information security specifications. While she enumerated the basic pillars of open banking, she emphasized the need to ensure privacy in customers’ information because a breach in privacy of customers’ data could mean loss of money by either the customers or shareholders.

Olowe of Open Banking Nigeria, advocated the adoption of a common API standard and listed the benefit of having such as reduction in time to market financial products, reduction of barriers of innovation in young startups, reduction in financial exclusion, etc. He further stated that with the CBN regulatory framework, Nigeria is now leading other African countries in the promotion of open banking. He then called for a collaborative effort at driving the agenda.

Oiwoh of NIBSS, represented by Mr. Niyi Ajao, explained that open banking is a multidirectional flow of customer data while closed banking is limited to third party. He further stated that open banking is a global landscape which Europe is pioneering, adding that NIBSS as a critical stakeholder in the advancement of open banking has created a sandbox that enables interested players to create NIBSS account and submit necessary documents to provide access to all API documentation.

He concluded that open banking drives competition, improves customer experience, product and service innovation and data monetization opportunities.

The Co-founder/CEO Flutterwave, represented by Mr. Bode Abifarin, also described open banking as an opportunity for Fintech to thrive, create new sources of revenue, ease doing business and offers better experience for customers including personalized options. He however called for a robust dispute resolution framework by the regulators so the process could be seamlessly run.

Clapton, the Chair/ED of Open Banking Initiative, Canada, described the foundation of open banking as API and that it was a consent model giving by the consumers over their banking data. He shared the experience of open banking in Canada and the economic realities in the country by stating that five banks in Canada made revenue of $159 billion in 2018 while about 48 per cent of Canadian could no longer meet their financial obligation (Ipso 27th October, 2019) and thus advocated a relationship that guarantees value for consumers of banking services.

He reiterated the need for open banking in Nigeria, suggesting that the Nigerian banking system needed a consumer consent model, a standard API, a central registry and regulatory framework.