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Nigeria Takes Bold Step to Become Africa’s First State To Adopt Open Banking Regulations

The move, approved by the Central Bank of Nigeria on March 7, 2023, will set the tone for the banking industry and encourage new forms of collaboration and competition. The advent of open banking has opened up exciting possibilities for fintech innovation. This practice enables banks to share customer data with third-party service providers such as fintechs and mobile money operators, who can then leverage this information to create innovative solutions that benefit consumers. The regulation will pave the way for a more streamlined and interoperable financial system, allowing for the development of new financial applications with access to customer data that will expand financial inclusion and provide custom loans. The open banking regulation in Nigeria was initially proposed in 2017 when industry experts formed Open Banking Nigeria. In 2021, the Central Bank of Nigeria (CBN) released a regulatory framework for open banking. That led to the creation of an industry committee that developed the draft of the open banking regulation in 2022. Now that the regulation is in place, the CBN will establish a registry while financial institutions can leverage the regulations to build new financial solutions.