With innovation always moving ahead of regulations and policies, government often has no option than to wait for nerd disruptors to come up with innovative ideas before formulating policies that will propel its development for the growth of the industry.
The rise of financial technology companies or Fintechs in the last three years in Nigeria has not only helped to reposition banks from their traditional services but has pushed financial institutions to create innovative products that will make banking simple, seamless and fast.
For example, now we have instant financial payment, standardized account number, digital and social lending, bank verification number and others.
In an effort to drive development and deepen adoption of open banking standards in Nigeria, a non-governmental organisation, Open Technology Foundation, has launched open banking forum.
Open Banking Foundation involves industry players in banking and financial technology space formed the organisation to analyze the need of the industry for common Application Programming Interfaces [APIs] standard among banks and other financial institutions, and develop the common API standards.
The group would function to provide a sandbox and other testing tools for certification, promote the adoption of open banking standards with stakeholders across Nigeria and enable further innovation in the financial services industry.
At the launch of the platform, Ope Adeoye of Open Technology Foundation said that open banking is transactional, and customers’ data that resides with financial institutions belong to the customers, adding that if customers own the data, they should be able to have access to the data.
“The data belongs to the customers, as such; they should be allowed to have access to it in order to know if that data can be used for loan application. Personal finance expert should be able to see my data and tell me the prospects of my financial status”.
Corroborating Adeoye’s views on the benefits of the platform, the Managing Director, TeamApt, Tosin Eniolorunda, said that to create an industry where everybody is happy, where productivity will be improved and there will be more revenues for everybody, there must be a standardization path.
“A lot of resources are wasted redoing and reinventing integration all over again across the different banks. I can tell you that I have to hire about thirty people to do this, it would not have been that case if there was a standard, all I needed to do is in just one place and if I do it in one place my business will go faster.
“I will not need to spend all my resources and time doing the same integration all over again, and because my business is growing faster, I will be bringing a lot of business to all the banks. If the industry want to move forward, I don’t think we have a lot of choice than to start direct to API”, Eniolorunda explained.
Managing Partner, Blue Advisory, Opeyemi Ndukwe said that there is no end-to-end view of the opportunities that exist within the open banking space.
According to her, “I am already looking beyond being able to view all my bank accounts in Nigeria. Right now, to view my accounts, I need to log-in one bank after the other. It would make my life infinitely easier if I could view all my bank accounts from one portal and perhaps transact from one place”.
She further stated that open banking allows different institutions to connect, talk to each other and provide information through a single, preferably standard, API and that for consumers, the transactional information generated as a result of their inflows, outflows, payment and transfers is “theirs”.
On the possible intervention of the Central Bank of Nigeria [CBN] to disrupt the innovation through policy, Adeoye said that he does not see the CBN sweeping the idea under the carpet.
“I have engaged the CBN’s official on open banking. They are happy about it and at this time the CBN is not even interested in bringing regulation because they see it as an innovative idea that will help the industry and create more companies that will create jobs. They want to see how it will evolve before it comes to conclusive regulation.”
He further said that lack information and understanding is what often frustrates creativity and innovation “in this part of the world”.
He added that, “We need to put ourselves in the shoes of the CBN to understand some of the risks they are trying to protect. Nobody in the CBN as far as I know will go out there and say they want to frustrate innovation that will fast track development to the country”.
Adeoye cited Unstructured Supplementary Service Data [USSD], mobile banking, and internet banking as ideas that were initiated before regulations came up with policies to support the industry.