Central Bank of Nigeria to Introduce Open Banking Initiative in August 2025
Nigeria is set to experience a significant transformation in its banking sector with the implementation of open banking, scheduled to commence in August 2025. This move, four years after the Central Bank of Nigeria (CBN) released its regulatory framework, marks a first for Africa [1].
The shift in financial data access and sharing is expected to have a profound impact on lending and financial services, particularly by enhancing data sharing between banks, fintechs, and third-party providers [2][4].
One of the key benefits of open banking is improved credit assessment and lending access. By allowing regulated, secure access to customer financial data through APIs, lenders and fintechs can build more accurate credit scores and lending models. This will facilitate credit to individuals and small businesses who were historically excluded due to lack of traditional credit histories [2][4].
Open banking also fosters innovation and competition in the financial sector. New players can offer tailored lending products and financial services that better meet customer needs, promising to expand options and lower borrowing costs [2][4].
Financial inclusion is another area set to benefit from open banking. By complementing existing digital payment solutions and agency banking networks, open banking reduces infrastructure barriers and brings lending and banking services to remote areas [1][3].
Regulatory safeguards and data privacy are also prioritized in Nigeria’s open banking framework. Strict customer consent management and legal agreements between banks and fintechs promote responsible data use, ensuring data-driven lending innovations are compliant with data protection laws and protect consumer rights [4].
Customers will now have the ability to give consent for financial institutions to access their transaction history, account balances, and spending habits. With a standardized API, secure and consistent access to customer data will be ensured across all participating institutions [1].
Moreover, a consent system linked to Bank Verification Numbers (BVNs) will allow customers to control who can access their data. This empowers consumers to make informed decisions about their financial data and ensures their privacy is protected [1].
The successful execution of open banking in Nigeria could serve as a model for other African countries to follow, potentially leading to the launch of the country's first reliable credit scoring system and driving financial inclusion more effectively [1][2][3][4]. In the coming years, consumers can anticipate more tailored financial products and increased access to credit.
Initially, the banking sector resisted centralizing open banking under the Nigerian Interbank Settlement System (NIBSS). However, a central registry will now verify the participation of financial institutions in the open banking system, ensuring a level playing field [3].
Banks and fintechs are expected to begin integrating with the open banking API ahead of the 2025 rollout, setting the stage for a more inclusive, innovative, and competitive financial services landscape in Nigeria.
Businesses in the Nigerian banking sector are gearing up for technological change with the upcoming implementation of open banking in August 2025, a move that is expected to revolutionize the finance industry. This innovation in technology will enable finance companies, including banks, fintechs, and third-party providers, to access customer financial data securely and enhance their lending and financial services offerings, thereby promoting greater financial inclusion and competition.
