Nigeria’s central bank asked lenders to adopt a common standard to share authorized customer data with third-party firms including financial technology and e-commerce companies, as part of efforts to expand digital payments usage and boost lending.
(Bloomberg) — Nigeria’s central bank asked lenders to adopt a common standard to share authorized customer data with third-party firms including financial technology and e-commerce companies, as part of efforts to expand digital payments usage and boost lending.
The new rules will ensure “efficiency, competition and access to financial services,” the Abuja-based Central Bank of Nigeria said in a circular posted on its website.
Open banking facilitates recurring payments and loans by allowing customers share their financial information, Adedeji Olowe, founder of Lendsqr, a fintech platform, said. “It will allow lending companies and saving apps to be able to work better, and banking agents to easily open bank accounts for individuals and small firms,” he said.
The government has long sought to broaden financial inclusion since 2012, but progress has been slow. Authorities have only in recent years pushed for banks and mobile money companies to share resources in a country where almost 40% of adults lack any form of bank account.
The customer authorization “makes it easier for a firm to access the financial accounts of a customer and able to qualify him for products such as credits,” said Tayo Oviosu, chief executive for Paga, one of the nation’s biggest payments companies with 21 million users. It might also encourage more firms to enter the market, he said.
The open banking regulation is the latest in the central bank’s efforts to broaden financial inclusion, which have had mixed results. A forced demonetization policy that was announced in October has created chaos and shut down transactions in the informal sector in Africa’s biggest economy.
–With assistance from Samuel Gebre.
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