As the Central Bank of Nigeria (CBN) releases operational and governance guidelines for open banking, financial system operators are on the verge of a higher level of competition (OB).
The document, which was made public yesterday, might make customers more concerned about the management, privacy, and safety of their data. Nonetheless, the principles of the rules encompass a strong foundation for guaranteeing the protection of consumers.
Open banking basically refers to data exchange by financial system operators in order to offer the market cutting-edge goods and services.
The CBN regulations outline the obligations and rights of various service providers as well as the procedures applied along the chain of exchange.
“The Regulatory Framework for Open Banking in Nigeria established principles for data sharing across the banking and payments system to promote innovations and broaden the range of financial products and services available to bank customers. As a result, open banking recognises the ownership and control of data by customers of financial and non-financial services, and their right to grant authorisations to service providers to access innovative financial products and services.”
“Open Banking applicability includes Agency Banking, Financial Inclusion, Know your customer (KYC), credit scoring/rating etc. These Guidelines are anticipated to drive competition and improve accessibility to financial and payment services. Participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy, operational, customer experience and risk management standards as prescribed by the Bank,” the regulator noted in its introduction.
The proposed Open Banking Registry (OBR), a CBN-managed public repository for participant registration information, is essential to the governance architecture.
The proposal states that OBR would regulate players, increase OB’s operational transparency, and guarantee that only registered institutions function in the ecosystem.
“Each participant shall be identified by its CAC business registration number, which shall be the unique key across the OBR system. The OBR shall maintain an API interface, defined within these guidelines, which shall serve as the primary means by which API (Application Programming Interface) providers manage the registration of their API consumers,” the CBN disclosed.
In addition to the CBN, the Corporate Affairs Commission (CAC) and the Nigerian Data Protection Regulation will be crucial to enforcing the rule-based interface between participants and data owners. They will be in charge of monitoring adherence to data governance policies and responsible behavior on the part of API suppliers.
According to the rule, data governance: “The Bank shall provide data oversight and governance for open banking information assets for participants in the open banking arrangement to ensure compliance with relevant legal and regulatory provisions.”
“Notwithstanding the provisions, all participants shall be guided by all extant laws relating to data protection, consumer rights and fair practices. Participants shall ensure that customer-permission data is accurate, up-to-date and complete in data exchanges.”
Among the other topics covered in the 67-page regulation are consent management, data access regulations, key performance indicators (KPIs), anti-competition laws, data ethics, data privacy, shared information framework, data verification procedure, and information security.
The country’s financial inclusion would increase, according to the Central Bank, and there would be incentives for the creation of essential financial service technologies.
When the framework was unveiled, there were already concerns about data security, privacy, and breaches, and some financial service providers were being accused of breaking the law.
