Open Banking and the Next Leap for Nigeria’s Fintech Industry
When Nigeria’s instant payment system ranked among the world’s best in efficiency and speed, it was more than a point of national pride. It was a demonstration that, with the right mix of policy, technology, and market readiness, African economies can leapfrog traditional banking hurdles. That achievement has now set the stage for another transformation: the shift towards open banking.
Open banking represents more than a technological buzzword. It is a financial architecture that allows banks and fintech companies to securely share customer data, with the customer’s explicit consent, through standardised Application Programming Interfaces. Around the world, it has redefined how consumers access credit, compare financial products, and move money across platforms. In Nigeria, it offers the promise of turning an already efficient payment system into a more intelligent and interconnected financial ecosystem.
This evolution builds on years of groundwork laid by the Central Bank of Nigeria. The introduction of the Bank Verification Number in 2014, the deployment of the Nigeria Inter-Bank Settlement System’s instant payment platform, and the implementation of the National Financial Inclusion Strategy have collectively created a strong foundation of identity verification, transaction speed, and digital literacy. Yet, despite their success, these systems still operate in isolation. Open banking aims to bridge these silos, allowing a customer’s complete financial profile to move seamlessly between banks, fintech firms, and digital service providers.
Consider a small business owner in Kano applying for a microloan. Today, she might be required to submit months of bank statements manually. With open banking, her transaction history could be securely shared with authorised lenders in seconds, enabling real-time credit assessments and faster loan approvals. This kind of integration would not only improve efficiency but also expand access to credit for individuals and businesses that have traditionally been excluded from formal financial services.
For Nigeria’s fintech innovators, open banking is a powerful opportunity to deepen service offerings and personalise customer experiences. With direct access to verified, consented financial data from multiple institutions, developers could create tools for automated budgeting, instant credit scoring, and cross-platform payments without the need for multiple logins. This would allow startups to focus on solving specific customer problems while relying on a unified infrastructure rather than building costly systems from scratch. Given that Nigeria attracted over $600 million in fintech investment in 2022 alone, the ecosystem is well-positioned to capitalise on these possibilities.
However, the road ahead is not without risks. Greater connectivity inevitably expands the potential attack surface for cybercriminals. Without strong cybersecurity protocols, rigorous API governance, and strict compliance oversight, the same data flows that power innovation could be exploited for fraud and identity theft. Trust is another hurdle. Nigerian consumers, many of whom have experienced online scams, may be hesitant to authorise data sharing. Building public confidence will require not just secure systems but also transparent consent processes, clear communication, and visible protections.
The Central Bank of Nigeria has already taken significant steps to address these concerns by releasing operational guidelines for open banking. These cover API specifications, licensing requirements, and governance rules, signalling an intention to ensure the transition is both orderly and secure. Yet, successful implementation will require more than regulation. It will demand collaboration between regulators, industry players, and developers, alongside ongoing public engagement to demystify the concept and highlight its benefits.
If managed well, open banking could elevate Nigeria from being a continental leader in payments to a global case study in how emerging markets can build inclusive, data-driven financial systems. The transition will likely be gradual, with digital-first banks and agile fintechs leading the charge before traditional institutions follow. But if the transformation of Nigeria’s instant payments is any indication, the country could close this gap far faster than many expect.
Just as instant transfers turned “payment sent” from an overnight process into a matter of seconds, open banking has the potential to make loan approvals, bill payments, and other financial services equally instant—powered not only by speed, but by intelligence and personalisation. In this next chapter, the question is no longer whether Nigeria can lead, but how quickly it can turn potential into reality.
Shuaib S. Agaka
