Central Bank of Nigeria Approves Open Banking Launch This August. Here’s what to Know

Global Examples: UK, EU, and US Open Banking Rollouts

Nigeria’s embrace of open banking follows in the footsteps of major economies that have adopted similar frameworks – and provides an interesting point of comparison with those experiences. In the United Kingdom, open banking was mandated by regulators in early 2018 (as a result of a Competition and Markets Authority ruling and the European PSD2 directive). The UK approach forced the largest banks to develop open APIs and an independent Implementation Entity was set up to oversee standards. The result has been a rapidly growing ecosystem of apps and services: by mid-2024 the UK reached 10 million active open banking users (including consumers and small businesses), which is about 15% of the UK population. The adoption curve is steep – just a year and a half earlier, the figure was 6 million, highlighting double-digit growth as awareness spreads. Popular use cases in the UK have included budgeting apps, credit score tools, account aggregators, and instant payment services that let people pay bills directly from their bank via third-party apps. The success in the UK shows that if executed well, open banking can achieve significant user uptake and drive fintech innovation (the UK now has a thriving fintech sector with open banking at its core).

In the European Union, the story is similar. The Revised Payment Services Directive (PSD2) came into effect in 2018 across EU member states, requiring banks to allow licensed third-party providers to access customer accounts (for data or payments) with consent. This standardized approach across Europe created a huge market for open banking services. By early 2022 there were already about 5 million open banking users in the UK alone and several million more in other EU countries. Forecasts projected over 63 million European open banking users by 2024, a 400% increase in just four years. Fuelled by this, the EU is now moving to enhance the framework further (with a proposed PSD3) to broaden open banking and improve harmonization. Europe’s experience underscores that regulatory push, combined with consumer demand for convenience, can rapidly change how banking services are delivered. It’s also notable that Europe now accounts for nearly half of the world’s open banking API infrastructure, reflecting how much innovation has been unlocked. For Nigeria, aligning with such global standards could make it easier for international fintech companies to enter partnerships or invest, knowing that Nigeria’s open banking environment is compatible with what they’ve seen elsewhere.

In the United States, open banking has taken a more market-driven path so far. There hasn’t been a single comprehensive regulation like PSD2; instead, data sharing has been happening through third-party aggregators (like Plaid) and bilateral agreements. This means the US has lagged a bit in formal adoption, but things are changing. The U.S. Consumer Financial Protection Bureau (CFPB) is in the process of implementing a rule under Section 1033 of the Dodd-Frank Act to formalize open banking rights. This forthcoming regulation is expected to require U.S. financial institutions to provide consumers access to their data and share it with authorized third parties – essentially catching up to the kind of framework Nigeria is now putting in place. In the meantime, tens of millions of Americans do use fintech apps that connect to their bank accounts (often by sharing login credentials, a less secure method that open banking APIs would replace). The key takeaway is that Nigeria is positioning itself among the leaders in open banking adoption. By being proactive, Nigeria could even leapfrog markets like the US in certain fintech innovations, since it will have a clearer, safer regime for data sharing sooner. This pioneering status in Africa could attract attention from global fintech players looking for growth markets with supportive regulation.

Nigeria’s fintech sector has been booming in recent years, and the introduction of open banking is likely to make it even more attractive to investors – both local and international. The country is already seen as Africa’s fintech capital: as of 2023, Nigeria was home to over 200 fintech startups (about 32% of all fintech companies in Africa), and between 2019 and mid-2023 it attracted roughly 49% of all fintech funding on the continent. In other words, nearly half of the venture capital pouring into African fintech has been going to Nigeria, reflecting the market’s potential. By formalizing open banking, the CBN is laying a foundation that could accelerate this trend.

Open banking tends to encourage a more vibrant and collaborative fintech ecosystem, which investors view positively. With standard APIs and clear regulations, startups can scale faster and integrate more easily with banks, reducing one of the barriers to entry in financial services. We can expect to see new ventures springing up to take advantage of the data access – whether in personal finance management, lending, payments, or other niches – and existing fintech players expanding their offerings. This diversity of fintech innovation, enabled by open banking, is attractive to venture capital and private equity investors who are hunting for the next big thing in emerging markets. As one analysis noted, unlocking Nigeria’s vast financial data through open banking can “attract investment and partnerships in Nigeria’s fintech ecosystem.” By being the first in Africa to implement open banking rules, Nigeria also stands out as a regulatory leader on the continent, potentially drawing interest from global fintech companies to set up shop or partner with local firms.

Furthermore, the open banking framework complements other initiatives (like the CBN’s regulatory sandbox and push for digital payments) that signal a forward-looking approach to fintech. Greater regulatory certainty often reduces risk for investors. Knowing that Nigeria has a well-defined open banking policy might make foreign investors more comfortable funding startups there, as opposed to countries with unclear rules. We might also see follow-on investments from banks into fintech (and vice versa) as collaboration intensifies – for example, banks acquiring stakes in fintech companies that use their data, or venture funds backing API infrastructure providers. Nigeria’s banking and tech giants could increase their fintech bets, and global tech investors who have been watching Nigeria will have even more reason to get involved now that the open banking environment is official.

Of course, investment outcomes will depend on successful implementation and uptake of open banking by consumers. If Nigeria can demonstrate strong early use cases and customer adoption once the system launches, it will validate the market and likely open the floodgates for more funding into the space. The optimism is high: as one startup publication put it, this move “positions Nigeria as a pioneer” in data-driven financial services and could “lay the foundation for a more competitive, efficient, and consumer-centric financial industry.” All of that bodes well for sustained investment and growth in Nigeria’s digital finance sector.

Implications for Banks, Fintechs, and Consumers

The launch of open banking in Nigeria will have far-reaching implications for all stakeholders in the financial industry:

• Traditional Banks: Banks will no longer solely “own” customer financial data, which may feel like a loss of advantage at first. They will face more competition from nimble fintech services leveraging that data. However, banks also stand to gain new opportunities – they can broaden their reach through partnerships and use open banking to offer more innovative, personalized products. Banks that embrace the change could, for example, integrate third-party fintech offerings into their mobile apps to delight customers. Moreover, open banking APIs can improve banks’ internal efficiency (think faster onboarding by pulling KYC data from other institutions, or better fraud detection by cross-referencing data). Nigerian banks have historically been very competitive and tech-forward (many already offer robust online banking), so we can expect them to adapt. We’ve already seen some banks involved in the standards-setting process, indicating readiness to implement. In markets like the UK, some banks initially resisted open banking but later launched their own fintech apps or marketplaces – Nigerian banks may follow a similar path of “if you can’t beat them, join them”, spurring overall sector innovation.
• Fintech Startups: For fintech companies, this is a massive enabler. Accessing banking data has been one of the toughest challenges for fintechs in Nigeria. Many resorted to workarounds like screen scraping or asking users for bank statements, which are inefficient and have security risks. With open banking APIs, fintech startups can focus on building great financial products instead of worrying about data acquisition hurdles. We’re likely to see more fintech startups entering the market now that the rails are being laid – particularly in areas like credit analytics, wealth management, comparison services, and merchant finance where being able to plug into bank data is key. Existing fintechs can enrich their services: a digital lending app can double-check an applicant’s bank transactions (with permission) to offer better terms, a savings app can pull funds from any of the user’s bank accounts automatically, etc. The playing field between big and small players evens out, which is healthy for innovation. Fintechs will, however, also be under pressure to uphold high security and privacy standards given the sensitivity of data they’ll handle. Those that build trust with users and strong partnerships with banks will thrive in the open banking era.
• Consumers: For everyday banking customers and businesses, open banking should ultimately translate into more choices, better financial products, and even cost savings. Consumers can expect a wave of new apps competing for their attention – offering to help manage budgets, find loans, invest savings, or make payments more conveniently – all leveraging their bank data (with consent). Banking could become more tailored to individual needs; for instance, you might get personalized financial advice or product recommendations based on your spending patterns, something banks rarely provided before. Also, switching providers will be easier if your data is portable, which could lead to better pricing (banks might lower fees or interest rates knowing customers can move their funds more effortlessly). Perhaps most importantly, open banking brings more people into the formal financial system by allowing alternative providers to serve them. If you’ve only had a basic bank account with little activity, you might now get offers from fintech services that can use data from mobile money or utility payments (if those become integrated down the line) to include you in credit or insurance products. Consumers do need to be vigilant – with great power over your data comes responsibility. The CBN has put in place central registries and consent dashboards to protect users, but individuals should still exercise caution about who they grant access to. It’s advisable to only use reputable, licensed apps (which the open banking registry will list) and to read the permissions you’re granting. Cybersecurity and fraud prevention will be front and centre as the ecosystem develops, and both regulators and providers will need to educate the public on safe usage. Overall, if implemented correctly, Nigerian consumers stand to gain significantly more convenience and control in their financial lives.

Challenges and Next Steps

While the promise of open banking is enormous, it’s not without challenges. Implementing such a system across an entire banking sector is a complex task. Key immediate next steps include: banks upgrading their systems to meet the API specifications, fintechs registering and getting certified to connect, and extensive testing to ensure interoperability and security. The August 2025 deadline for the start of data sharing is ambitious but achievable if stakeholders cooperate closely. As one industry expert pointed out, “collaboration and coordination… especially in Nigeria” will be critical; all parties – regulators, banks, fintechs, and telecoms – need to work in unison for open banking to succeed.

Security will be an ever-present concern. Opening up data access creates new points of exposure, so the robustness of security measures will make or break trust in the system. The CBN’s guidelines around encryption, monitoring, and fraud management must be strictly followed. We may see additional rules or perhaps an Open Banking Nigeria certification for third-party apps that meet high security standards. There is also the human element: as Nigerians begin to use open banking services, there must be awareness campaigns about phishing or scams (e.g., reminding people that they should only link their bank data to approved apps and never share sensitive info outside the official channels). Regulators can draw lessons from the UK and EU on consumer protection in open banking.

Another challenge is scalability and performance. With potentially millions of API calls between banks and fintechs, the infrastructure needs to handle the load. This is where the years of planning should pay off – presumably, the Nigerian financial IT infrastructure (via NIBSS and others) has been gearing up for higher volumes, especially after the push for cashless transactions. Nonetheless, hiccups could occur in the early stages, so stakeholders will need contingency plans and a fast response to any technical issues or data breaches that might arise.

On the regulatory front, the CBN will likely continue refining the framework as open banking rolls out. There may be expansions to cover more types of financial data. For instance, open banking could evolve into open finance – including insurance, pensions, or telecom payment data – as has been the discussion globally after the initial phase. The success of open banking will also depend on customer uptake. Banks and fintechs will have to build user-friendly interfaces for consent management (probably within mobile apps) so that an average user finds it easy to link and delink accounts. If it’s too confusing, people might not use it in large numbers. Hence, simplicity and clear value propositions (like “connect your accounts to see all your finances together” or “share your data to get a better loan rate”) will drive adoption.

Despite these challenges, the overall sentiment in the market is optimistic. Industry stakeholders are gearing up for the change, and many have been advocating and preparing for this moment for years. As launch approaches, we can expect pilot programs and maybe limited beta tests of open banking connections. By the time August 2025 arrives, Nigeria aims to have a functional open banking ecosystem from day one.

The Central Bank of Nigeria’s decision to greenlight open banking is a landmark moment that could reshape the country’s financial services for the better. It comes after careful preparation and aligns Nigeria with a global shift toward more open, data-driven finance. If all goes well, Nigeria’s banks and fintechs will soon be collaborating in ways they never have before, and customers will reap the rewards of that innovation. Imagine a Nigeria where getting a loan is faster and based on your real financial patterns, where managing money across accounts is as easy as a few taps on your phone, and where new startups continually bring out clever financial solutions tailored for the Nigerian market. That is the future that open banking aspires to create.

The move also solidifies Nigeria’s position as a fintech leader in Africa. Being the first to implement open banking gives Nigerian companies a head start to innovate and expand regionally, and it sends a message that Nigeria is serious about modernizing its financial sector. We may soon see other African regulators following suit, but Nigeria will have the advantage of experience and a more mature ecosystem. Innovation, competition, and customer-centric services are set to define the next chapter of banking in the country. As one analysis summarized, this new framework “positions Nigeria toward a more competitive, efficient, and consumer-centric financial industry”, empowering consumers, supporting small businesses, and stimulating economic growth along the way.

In the coming months, all eyes will be on the implementation process. Challenges notwithstanding, the consensus is that open banking is a positive, necessary step. The CBN and financial industry players will need to maintain momentum and public trust as they roll it out. For Nigeria’s 120 million bank customers, big changes are on the horizon – but they are changes designed to give you, the customer, more power and choice in your financial life. The banking and fintech landscape in Nigeria by this time next year could look very different, with more collaborative energy and customer-friendly services than ever before. In sum, open banking’s launch is poised to transform Nigeria’s banking and fintech landscape by driving innovation, enhancing competition, and creating a richer, more inclusive customer experience. It’s the start of a new era – one where your data can work for you, and where Nigeria’s digital finance sector can reach new heights of growth and creativity.

Its a long read and if you made it to this point, thank you for your time 🙂

Disclosure: an AI tool assisted in this research and publication