The Central Bank of Nigeria (CBN) has stressed the importance of open banking in the development of the Payment Systems Vision PSV 2030.
The banking sector regulator said it considers the concept as one of the top global trends and new practices in payment that have been deployed in other countries which must be considered in Nigeria.
Open banking is a system that provides a user with a network of financial institutions’ data through the use of application programming interfaces (APIs). The Open Banking Standard defines how financial data should be created, shared and accessed.
According to a statement made available to THISDAY by Centric Gateway, the central bank deemed open banking necessary because of the importance of having a strategy that is relevant for the Nigerian market domestically, for regional and global markets where Nigeria plays a role in international flows.
The Director of Payment System Management, CBN, Sam Okojere, was quoted in the statement to have noted that the request for information into the Payment Systems Vision (PSV) 2030 document, would define the strategic agenda for the Payments System for the next ten years, “it comes on the heels of its very successful Payments System Vision PSV2020 that wraps up at the end of 2019.”
It added: “Other global payments trends identified for consideration in Nigeria’s payments strategy in the next 10 years are new payment methods, digital access, distributed ledger technology, big data and artificial intelligence, cyber-security, digital identity, as well as machine learning and robotics process automation.
“This is because of the critical need for the PSV2030 framework to recognise swiftly evolving user requirements, technical solutions, regulatory environments and external threats that typify the industry.”
The CBN explained that with change in the financial industry driven by rapid advances in technology, customer expectations and new business models (including Fintech), the payments industry had evolved over the past few decades from the early days of electronic payment.
In a related development, Centric Gateway, a fintech that implemented an Open Banking gateway for a Nigerian Tier-1 bank, said it has joined Open Banking initiative—led in Nigeria by the Open Technology Foundation—as a member, to drive advocacy for a common API standard.
The Chief Executive Officer, Centric Gateway, Niyi Kolade, noted that as part of the company’s desire to improve financial technology in Nigeria, Africa and the world by creating innovative solutions that work for the market, the collaboration with Open Technology Foundation would help to not only drive the company’s business objectives, but to also help the entire payment services industry to better serve the needs of customers everywhere.
The statement said Open Technology Foundation (OTF), also known as Open Banking Nigeria, was established to drive the development and adoption of Open Banking standards in Nigeria for greater innovation in the financial ecosystem.
It added that OTF encourages a system where banks can easily connect with other APIs in the market to extend their service offerings by introducing native fintech solutions in a plug-and-play manner.
The spokesperson for Open Technology Foundation, Ope Adeoye, while speaking on the new membership expressed delight to have yet another set of industry players joining the Open Banking Nigeria initiative.
He said: “It is our conviction that soon enough, Open Banking would grow a tap root and more industry stakeholders would strongly advocate and practise it because of its numerous benefits to all across the value chain.
“The Nigerian market has been ready for Open Banking for a long while, the benefits of Open Banking far outweigh the risks, which can adequately be easily mitigated, and that it is impressive the CBN is ready to act to ensure that regulation this time does not lag excessively behind innovation.”