|By Adejumo Adekunle
The CBN published its Open Banking Regulatory Framework in 2021. Three years later, fewer than 10 percent of licensed financial institutions are compliant. The APIs that would unlock $12 billion in potential value are, for the most part, still closed.
IN March 2021, the Central Bank of Nigeria published its Open Banking Regulatory Framework, a document that, on paper, placed Nigeria among the most forward-thinking open banking jurisdictions in Africa. The framework mandated that licensed financial institutions make customer data available through standardised Application Programming Interfaces, enabling third-party developers to build financial services products on top of existing bank infrastructure. It was, in the language of fintech optimism, the document that would democratise Nigerian financial data.
Three years later, the democratisation has not arrived. According to Open Finance Africa, a research organisation that tracks open banking implementation across the continent, fewer than 10 percent of CBN-licensed financial institutions have implemented API infrastructure that meets the framework’s technical standards. The majority of Nigeria’s commercial banks have published API documentation, the equivalent of hanging a sign that says “open” while leaving the door locked. The live, production-grade, third-party-accessible financial data APIs that the framework envisions are, for most institutions, an aspiration rather than an operational reality.
“The framework is excellent,” said Agbetola Ayokanmi Victor, a data analyst who has examined open banking implementation models across multiple markets. “The problem is that a regulatory framework is not an implementation plan. Nigeria published the what but not the how, with no enforcement mechanism for the timeline, and no clear consequence for non-compliance. In that environment, institutions that have significant proprietary interest in keeping their data closed have very little incentive to open it.”
What Open Banking Was Supposed to Unlock
The economic case for open banking in Nigeria rests on a straightforward premise: that the data held by Nigerian financial institutions about their customers’ financial behaviour is vastly more valuable as shared infrastructure than as proprietary competitive advantage. A credit decision made with access to a borrower’s complete cross-institution transaction history is more accurate than one made with access only to the transactions that passed through a single bank. A personal finance management app that can aggregate accounts across multiple institutions is more useful to a customer than one that can only see one of them.
McKinsey estimated in 2022 that full open banking implementation in Nigeria could unlock approximately $12 billion in annual economic value, through improved credit decisioning, reduced fraud, more efficient payment routing, and new financial products that the existing siloed infrastructure makes impossible. The IFC’s digital finance team has identified open banking data as the single most important missing input for closing Nigeria’s $15.8 billion annual SME credit gap.
Agbetola Ayokanmi Victor focuses on the credit dimension specifically: “The reason informal sector borrowers get denied credit is not that the data about their financial behaviour doesn’t exist. It exists in their mobile money records, their bank transaction histories, their payment platform logs. The reason it can’t be used is that it’s scattered across a dozen institutions that won’t share it with each other or with anyone else. Open banking is the infrastructure that would change that. Without it, the credit gap is structural and permanent.”
“The data about informal sector borrowers’ financial behaviour exists, but scattered across a dozen institutions that won’t share it. Open banking is the infrastructure that would change that. Without it, the credit gap is permanent.”
— Agbetola Ayokanmi Victor, data analyst
Why the Banks Are Not Opening
The resistance of Nigerian commercial banks to open banking implementation is, at one level, an entirely rational business response to a policy that threatens their most valuable competitive asset. The transaction data that banks hold about their customers is the foundation of their ability to cross-sell financial products, price credit risk, and retain customers. Sharing it with third-party developers including the fintech startups that are already competing directly with bank products, removes a structural advantage without, from the bank’s perspective, an adequate return.
The CBN’s framework attempts to address this concern through a tiered access model: routine transaction data would be freely shared with consented third parties, while more sensitive categories of data would require explicit commercial agreements. But the tiering has not been operationalised in practice, and banks are behaving as though the entire framework is optional until the CBN demonstrates otherwise.
“The CBN has published a framework without teeth,” said Kemi Lawal, a fintech regulatory consultant who has advised several Nigerian banks on open banking readiness assessments. “There are no published enforcement timelines, no published compliance examinations, and no published penalties for non-implementation. In that environment, the rational response for a bank is to wait and see whether anyone actually enforces this before investing in the infrastructure to comply.”
The Fintech Sector Is Also Not Ready
The implementation gap is not entirely on the banks’ side. The fintech ecosystem that open banking is designed to enable has its own infrastructure deficit. Building products on open banking APIs requires a category of technical capability, API integration, data normalisation across institutional formats, real-time data reconciliation, that many of Nigeria’s smaller fintech companies do not currently have.
“Open banking creates an opportunity, but it doesn’t create the capacity to use it,” said Agbetola Ayokanmi Victor. “You need a fintech sector that is technically ready to consume the APIs and build products on top of them. For the largest fintechs, that capacity exists. For the middle and lower tier, there is significant investment required before open banking data becomes actionable. The policy conversation has focused almost entirely on getting the banks to open up. It has not focused nearly enough on building the analytical capacity on the consumer side to actually use what the banks open.”
The UK’s open banking implementation, the most mature in the world, took approximately four years from the publication of its framework to the first wave of meaningful third-party product adoption, and required a dedicated implementation body, the Open Banking Implementation Entity, to develop and mandate technical standards. Nigeria has published a framework and appointed a technical committee. It has not created an equivalent institutional structure to drive implementation.
Until it does, the $12 billion opportunity will continue to exist on paper, in a regulatory document published in 2021, while the data it was designed to free remains locked inside institutions that have not yet decided to let it out.
