Exclusive: Nigeria’s central bank walks back decision to “centralise Open Banking”

Nigeria’s central bank has reversed its decision to centralise its Open Banking efforts with NIBSS, the national payment settlement mechanism, TechCabal has learned. This comes after intense consultations with industry players, following TechCabal’s exclusive reporting on the central bank’s decision to make NIBSS serve as an aggregator of the open banking system.

In a statement shared with industry players, the central bank says that “in appreciation of the Industry feedback and foster [sic] collaboration and innovation, we are aligned with the “Open” aggregation model. While affirming NIBSS’ neutrality as a shared service provider, the bank explained that NIBSS would only support the central bank to develop an Open Banking Registry to meet industry requirements. But the operations of the registry would be “the sole responsibility of the Regulator.”

Recall that Nigeria’s central bank recently announced rules

to guide Open Banking in Nigeria. The recently announced rules to guide Open banking are the first of its kind in Africa and will potentially pave the way for Open Finance. Open Finance is the next rung on the data-sharing ladder, extending access and sharing of consumer data to more financial products and services like loans, consumer credit, investments, and pensions.

Keeping Open Banking, open

Two weeks after the Open Banking guidelines were announced, TechCabal learned of a proposal to centralise access to its Open Banking APIs with the National Inter-Bank Settlement System (NIBSS). This was hotly contested by banking and fintech professionals.  “I want to connect to fintech or bank directly. Why do I have to go through NIBSS? It is the opposite of Open Banking,” an industry expert told TechCabal. “It is like forcing everyone to watch one TV station in order to see broadcasts from other television networks,” the person added.

Industry players TechCabal spoke to said the decision to make Open Banking API consumers and providers talk to each other through NIBSS was at odds with the CBN’s published guidelines. Those sources expressed hope that the central bank would see reasons to walk back its stance. Clearly, the bank has listened.

Had the central bank stood its ground, its decision might have called into question the operation of firms like Mono, OnePipe and Okra. These API firms have already implemented solutions that allow retail bank customers to securely connect their financial accounts to business apps and services. The resulting stalemate might have hindered wider progress in building the foundation for Open Finance, which enables a wider integration of financial data with non-financial industries, such as healthcare, education and government.

As the next steps, the central bank says it is willing to receive further operational and technical feedback from the banking and fintech industry to help make the Open Banking guidelines operational.