The Central Bank of Nigeria (CBN) has launched a Regulatory Framework for Open Banking in Nigeria to deepen innovation and increase the range of products available to customers in the financial service industry.
In a circular released on Wednesday, the apex bank said the framework allows banks and third-party exchanges to obtain customers’ data.
This, according to the industry regulator, will ensure financial inclusion and lead to innovations that meet customers’ demands.
It was gathered that the customer-approved data will be made available on the Application Programming Interface (API) with the firms making the data available called API Providers (AP), and the companies using such identified API Customers (AC).
The CBN said participants in open banking must secure consent from the data owners while the consent shall be re-validated annually and/or where the AC had not used the service for 180 days.
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“Customers can approve and revoke consent to the usage of their data, “Customers shall always have control over their data and be able to access, manage or withdraw their consent at any point in time; and Participants shall develop and agree on a consent management mechanism which includes a clear set of policies and procedures,” CBN wrote.
However, while open banking is meant to innovate the banking system in Nigeria, it will also expose customers to various risks including cybercrime and data privacy breaches, among others.
“The basic risks in open banking include cybersecurity, data privacy and integrity, contract management, product management, money laundering, regulatory and compliance.
“At the minimum, participants shall address all identified risks, by developing and implementing effective risk management frameworks, policies, and procedures for open banking, approved by the Board of Directors, as well as institute a culture of sound corporate governance,” it added.