Unique: CBN wants NIBSS to control access to Open Banking infrastructure

The Central Bank wants NIBSS to function an aggregator for financial institution and fintech APIs, however banking {industry} professionals say centralising API access within the settlement system operator is the other of Open Banking.

After two years of planning and drafting rules, Nigeria’s central financial institution introduced guidelines to information Open Banking in Africa’s largest economic system two weeks in the past. Adopting Open Banking in Nigeria “will foster the sharing of customer-permissioned data between banks and third-party firms to enable the building of customer-focused products and services,” reads the central financial institution assertion. 

The announcement was hailed by banking {industry} and fintech professionals in Nigeria and globally. The subsequent step to operationalise the principles for open banking entails making a registry that can perform as a public repository for particulars of registered members. The Open Banking Registry may even perform as a repository for the APIs that enable banks and non-banks to alternate buyer knowledge.  

Per the Open Banking Guidelines, the Open Banking Registry’s API interface would function “the primary means by which API providers manage the registration of their API consumers.” Last week, the central financial institution held talks with monetary sector gamers to focus on the following steps for creating the Registry and accessing financial institution APIs. Multiple sources who had been privy to the talks say the Central Bank of Nigeria instructed representatives of economic sector establishments that it needed the registry to be designed and maintained by The Nigerian Inter-Bank Settlement System (NIBBS). The apex regulator additionally instructed {industry} representatives on the assembly that it needed NIBSS to control access to banks’ APIs in what one particular person shut to the talks described as an ”aggregator mannequin”.

Industry professionals who had been on the assembly say that whereas they haven’t any qualms with NIBSS constructing and sustaining the Open Banking registry, they oppose the CBN’s transfer to impose centralised control to Open Banking APIs by way of NIBBS. “I want to connect to fintech or bank directly. Why do I have to go through NIBSS? It is the opposite of Open Banking,” one one who is shut to talks, disclosed. “It is like forcing everyone to watch one TV station in order to see broadcasts from other television networks,” the particular person added.

Already, companies like Mono, Okra and OnePipe enable retail financial institution clients to securely join their monetary accounts to the enterprise apps and providers they select. The CBN’s new transfer could imperil how these companies join to the monetary establishments of their clients. Formalising Open Banking guidelines was supposed to convey transparency, help competitors and foster innovation within the supply of economic providers. But making Open Banking API customers and suppliers discuss to one another by way of NIBSS dangers turning the industry-led Open Banking effort on its head and is at odds with the CBN’s tips.

Banking and fintech insiders argue the settlement company—which was co-created by the CBN and the Nigerian Banker’s committee—can’t be each regulator of open banking and a participant within the open banking system.

NIBSS was created in 2014 to allow same-day clearing and settlement of inter-bank transfers and funds in Nigeria. NIBSS additionally affords different cost merchandise together with mCash, a customer-to-merchant funds product, NQR, a QR-code-based funds platform and e-Bills Pay, for amassing levies, and charges. Centralising Open Banking inside NIBBS would make it each a regulator and a competitor.

Industry professionals concede that the CBN could produce other professional causes for proposing this association, however they ask that the apex regulator be open to strategies from fintechs and banks. “We’re engaging with the CBN. They have always given us a listening ear,” one particular person shut to ongoing talks instructed TechCabal.

Update: This story was up to date to extra precisely replicate how the CBN’s proposal impacts Open Banking in Nigeria.