Nigeria’s Open Banking Era Begins Today

Today, an era in the Nigerian financial industry begins. For the first time in our history, and the first in all of Africa, Nigerians will be stepping into a new kind of banking world called Open Banking. Sounds technical? It is. But this fellow in my inbox requested I break it down, and I am obliging because this change might soon affect how you shop online, borrow money, save, or even track your spending, if you care enough about personal finance.

Nigeria now joins the UK widely considered the birthplace of modern Open Banking. Other countries in this circle include Singapore, Japan, South Korea, Australia, and the European Union.

To understand how important this is, let’s talk about an experience you may be familiar with. If you’ve ever tried to get a loan from a Nigerian bank, you already know how hard it can be. Even with a job and a salary, banks often ask for collateral, references, and the head of a mountain lizard. And if you’ve used some of the popular loan apps, you know how stressful that can be too. Tiny loan amounts, sky-high interest, and if you miss a payment, they start swearing for you and calling your friends and family to tell them how much of a disgrace you are.

Why is it so hard to be trusted? Because banks and loan companies don’t really know you. Nigeria has 120 million bank customers in scores of what you can call silo financial institutions. Even though you may have used a bank account for years, your financial information, i.e. your salary, your spending habits, your savings is locked inside that your one bank. No one else can see it, not even you in some cases. So, when you go to another bank or a loan app, it’s like starting from scratch. They don’t know whether you’re responsible with money or not. That’s why they don’t trust you. That’s why it’s believable when a report said about 70% of account holders still can’t access credit.

Now, imagine if you could walk into any bank, and they already knew you were someone who gets paid regularly, saves regularly, pays your staff on time, and spends wisely. Imagine being able to apply for a loan, an investment, or insurance, and instead of begging and waiting, you get an answer in minutes, all because your financial record speaks for itself. That’s the promise of Open Banking.

Starting today, May 1, banks in Nigeria will be required to connect their systems in a way that allows customers—you and me—to safely share our financial data with other licensed financial companies. But don’t worry, this doesn’t mean your data will be floating around the internet. You’ll have to give permission first, and only companies approved by the Central Bank of Nigeria can access it.

And trust me, getting that approval from the CBN is no walk in the park. The system has been designed with safety in mind. In fact, Nigeria’s Data Protection Regulation, released back in 2019, laid the groundwork by making data privacy a top priority. The CBN’s open banking guidelines build on that foundation, creating a secure framework that ensures banks and third-party providers can collaborate without putting your personal information at risk.

Think of it like giving someone a spare key to your apartment, but only if you trust them and only if they sign an agreement not to mess up your things.

So what does this look like in real life? Let’s say you’re shopping on Jumia. Instead of entering your card details and worrying about fraud, you can log in to your bank account securely and make payments directly, no need to remember your card PIN or panic when it fails. Or maybe you’re trying to rent a new apartment, and the landlord wants proof that you’re financially stable. No need printing out your bank statement, with Open Banking, a property app could (with your consent) view your income and rent history and vouch for you.

It also means you could use budgeting apps that connect to your account and help you track spending, alert you when you’re going broke before payday, or even suggest where to invest based on how much you save each month. This kind of smart financial advice used to be for the rich or the tech-savvy. Now, it’s coming to everyday people.

This idea didn’t start yesterday. According to a story I heard, back in 2017, Adedeji Olowe, a Nigerian fintech founder got tired of begging banks to connect to his product. He wanted an easier way for new companies to work with banks, but the system was messy and complicated. That frustration sparked a movement, Open Banking Initiative, one that would take nearly eight years to reach this moment. A group of banks, tech companies, and passionate individuals started pushing for one simple thing: let people access and use their own financial data safely. Members of that movement include companies like FCMB, Fidelity Bank, KPMG, Paystack, EY, Lendsqr, and PWC. After years of pushing, talking, testing, and waiting, Nigeria’s Central Bank finally gave the green light.

This is a huge win for technology companies that have been quietly building tools to make banking better. But more than that, it’s a win for everyday Nigerians. For the market woman who wants a small loan without stress. For the young graduate trying to save. For the business owner who needs insurance but doesn’t know where to start.

Of course, nothing is perfect. Banks will take time to adjust. Some may resist. And not everyone will understand how to use it right away. But just like we got used to mobile banking, instant transfers, and paying with USSD codes, the odd is that we will adapt.