The Central Bank of Nigeria (CBN) has advised banks and other financial institutions to embrace opportunities represented in open banking to drive financial inclusion in the country.
Deputy Governor, Financial Systems Stability Directorate, Mrs. Aishah Ahmad, gave the advice at the Chartered Institute of Bankers of Nigeria (CIBN) Advocacy Dialogue Series six in Lagos on Tuesday.
Open banking is the practice of sharing financial information electronically, securely, and only under conditions that customers approve of it.
It enables third party developers to build applications and services around the financial institution, particularly the banks who hold customer data.
“As we are all aware, the pace of changes in information technology driven age is a lot faster in the financial service sector; and this is why the world, as we know is constantly evolving, especially in the Fintech space.
“As such it is proper for regulators to try to get ahead of the changes with complimentary policies, innovative ideas and dynamic trends that will help us in realising our goals for Nigerian payment system.
“We continue to implore regulated entities to innovate and seek out new opportunities while maintaining resilience against unforeseen challenges.
“In recent years, there has been several emerging trends in the Fintech space, including paycheck disruption, artificial intelligence, machine learning, digital banking, Big Data block chain technology and robotic processing automation, among others.
“One of such emerging trends is the open banking. And it has attracted the attention of operators and regulators because of the enormous potential that it holds for financial service industry,” she said.
Ahmad, represented by Mr. Musa Jimoh, Director, Payment Systems Management, CBN, said that banks and other financial institutions were already attuned to all the various technology changes within this space.
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Earlier, Dr. Ken Opara, Chairman of CIBN and Chief Host of the discourse, said that open banking APIs in the banking industry was now being adopted in more than 87 per cent of countries and regions around the world.
Opara said that there were over 10,000 financial institutions around the world with open banking implementations, as noted by LearnBonds.
“Despite the wide adoption of open banking, it is still very much in its infancy stage, however, demand is growing.
“According to Allied Market Research, the open banking market is growing at 24.4 per cent, reaching $43.15 billion by 2026.
“Also, as stated on globenewswire.com, the Global Open Banking Market was valued at approximately $9,045 million in 2019 and is anticipated to grow with a healthy growth rate of more than 24 per cent over the forecast period 2020-2027.
“Given this projection, it has become pertinent to explore in detail what the opportunities, risks and path forward could look like for this innovation,” he said.
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