Nigeria’s central bank will launch an open banking system in August, four years after it approved a new regulations to control the system.
According to the new system, regulated financial institutions can now access customer data held by commercial banks, from account balances and transaction history to expenses and save habits. The Nigeria Central Bank (CBN) will make a new API that all financial companies can connect to to access this information.
CBN has assured the nigeries that they will still be In control of their data And they may decide who can access it, to what extent and for what purpose.
The new system will be monitored by the Open Technology Foundation, a non -profit management of industry experts in the local financial sector. The foundation is accused of developing a uniform standard that makes integration for all stakeholders quickly and easily. Its members include local fintechs such as Carma, Opay and Palmpay, as well as global players such as Ernst & Young and KPMG.
“This ambitious initiative aims to revolutionize how financial services are delivered and consumed and move away from a dilad, bank -centric model towards a more interconnected, data -driven ecosystem,” says Local business development expert Adeyemi Kayode.
Open bank is focused on Increase financial inclusion. According to this interconnected system, institutions can access their client’s financial data, including accounts held in other banks or fintechs. This enables a better credit rating and thus allows nigeries to gain better access to credit.
In Nigeria, bank loans have traditionally been oblique to the informal sector, which constitutes the overwhelming majority of the labor force. Fintechs has appeared to serve this market, but they are largely hindered by a lack of customer data, which is judged by the banks.
According to the latest data74% of Nigerians were included financially last year. However, the difference is high in rural and regions with conflicts. Mobile money and agent banks have closed the gap over the past five years, but the West African nation still has a long way to go.
In addition to the overall financial inclusion, open banks enable personal financial services. With a holistic image of a client’s financial history over several channels, financial institutions can be better placed to offer the right products that best suit the client.
The ultimate goal “is a more competitive, customer -centric financial ecosystem where innovation is stimulated by collaboration and data sharing, which ultimately leads to greater efficiency and value for financial services,” says Kayode.
Oler Oladele, the founder of the Nigerian Investment Advisory Money Wit Club, agrees. She says Open Banking will mark a new era for Nigerians, which means they “can take back control.”
“It’s not just about money. It’s about visibility, consent and power.”
Digital payments give a lifeline for Nigeria’s youth
As Nigeria Waiting for your open bank, another financial segment has increased exponentially: digital payments. While they have increased financial inclusion, especially in the countryside, they are now becoming a source of livelihood for millions of young Nigerians.
Nigeria’s banking sector has met a number of challenges, with scarcity at cash at the ATM terminals among its most pressing. This has led to the growth of terminals for sale (POS) across the country where customers can withdraw cash, pay bills, make transfers, make air time and data top-ups and more.
These terminals are now providing an income source for Nigerian youth who serves their lives through transaction fees.
According to Nigeria Inter-Bank Settlement System, there were over 5.5 million POS terminals at the end of 2024, more than twice as large as the 2023 figure. These terminals carried out N18 trillion ($ 11.2 billion), a record for all the time.
“We have many stories about individuals and families that have benefited from the POS business through the income made from fees for transactions,” says Femi Hanson, head of marketing at Palmpay, a local fintech start that claims to have 700,000 POS agents in the country.
Hussein Olarewaju, whose HAQ technology management services are one of the largest players in the sector, reveals that most POS operators are trained young people who have eliminated in the formal employment. However, the business has enabled them to make money and create new jobs.
“Each agent point usually employs at least one to two employees and translates to hundreds of thousands of young people who received reliable income in a country where youth unemployment was over 50% in 2023,” he abandoned.
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