Open Banking: CBN warns financial institutions against unauthorised use of customers’ data
The Central Bank of Nigeria (CBN) has said that in the operation of open banking in Nigeria, the ownership and control of data by customers of financial and non-financial services must comply with the customer’s right and authorisations.
According to the apex bank, open banking recognises the ownership and control of data by customers of financial and non-financial services, and their right to grant authorisations to service providers for the purpose of accessing innovative financial products and services.
The CBN in its ‘Operational guidelines for open banking in Nigeria’ released in May, 2022 warned about the need to recognise the rights of the customer and authorisation for the use of customer data as part its efforts to enhance competition and innovation in the banking system.
The guidelines state, “The Central Bank of Nigeria, hereafter called the Bank, had issued the regulatory framework for open banking in Nigeria in its efforts to enhance competition and innovation in the banking system.
“The Bank recognised the existence of an ecosystem for Application Programming Interface in the banking and payments system and is aware of various efforts in the industry to develop acceptable standards among stakeholders.”
The apex bank stated that the open banking promotes innovations and broadens financial products and services, which involves sharing of customer data and inter-connectivity of systems, therefore, exposing the participants to risks such as cybersecurity, money laundering, regulatory and compliance, contract management and product management.
According to the CBN, open banking offers benefits and opportunities to the financial sector but is accompanied with risks that could undermine the objectives if not properly managed.
The CBN stressed that the framework established principles for data sharing across the banking and payments system to promote innovations and broaden the range of financial products and services available to bank customers.
