The Central Bank of Nigeria (CBN) on the 7th of March, 2023 , passed its Operational Guidelines For Open Banking in Nigeria pursuant to its earlier issued Regulatory Framework For Open Banking in Nigeria (which i had written about in a previous article as well).
These guidelines were issued in order to give a more regulatory backbone as well a functional Framework for the orderly and safe conduct of open banking services in Nigeria, which is why the focus of this article will be on the notable provisions of the guidelines regarding :-
– Their applicability scope
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– Their objectives
– Some notable open banking terms and their meanings
– The recognized participants of the Nigerian Open Banking system and their responsibilities
– Anti-Money Laundering and Combating The Financing of Terrorism(AML & CFT)
– The Open Banking Registry (OBR)
– Interface Requirements
– Dispute Resolution
– The incident reporting portal
What is the applicability scope of the guidelines?
The guidelines apply to banking and other related financial services as categorized and determined by the bank in the regulatory framework for open banking in Nigeria.
What are the objectives of the guidelines?
– To provide clear responsibilities and expectations for the various participant categories.
– To ensure consistency and security across the open banking system.
– To stipulate safeguards for financial system stability under an Open Banking regime.
– To promote competition and enhance access to banking and other financial services.
– To outline minimum requirements for participants.
What are the meanings of some of the open banking terms commonly used in the guidelines?
Some of the terms commonly used by the guidelines include:-
– 2FA – 2 Factor Authentication
– CM – Configuration Management
– OLTP – Online Transaction Processing
– DMZ – Demilitarized Zone(pertaining to TCP/IP Networks)
Who are the recognized participants in the Nigerian Open Banking system and what are their responsibilities?
The participants in the Nigerian Open Banking system are :-
The AP – or API Provider who is to use Application Programming Interfaces (APIs) to avail data or services to another participant.
The AC – or API Consumer who typically accesses data belonging to an AP by means of an Open Banking Service Level Agreement (SLA).
The Customer – The data owner that shall be required to provide consent for the release of data for the purpose of accessing financial services.
What are the provisions of the guidelines regarding the Open Banking Registry or OBR?
The guidelines reaffirm the OBR as being provided and maintained by the CBN for the industry to :-
– Provide regulatory on participants
– Enhance transparency in the operations of open banking
– Ensure that only registered institutions operate within the open banking ecosystem
– Serve as a public repository for details of registered participants.
What are the provisions of the guidelines on interface requirements?
The guidelines require that regarding interface requirements :-
– The integration and communication interface between an AP & AC shall be 100% electronic using a system of API taxonomy as defined by the API guidelines
– The software architectural style shall be representational state transfer (REST) while the data interchange format shall be JavaScript Object Notation(JSON).
– In order to be comparable with evolving global financial standards,the data standard for financial transactions shall be a model based on ISO 20022 or any other acceptable minimum standard.
What are the provisions of the guidelines on Anti-Money Laundering and Combating The Financing of Terrorism (AML/CFT)?
The guidelines provide that APs and ACs shall comply with the extant AML/CFT regulations in Banks and Other Financial Institutions (OFIs).
What are the provisions of the guidelines on Dispute Resolution?
The guidelines provide that participants shall abide by the dispute resolution mechanism laid down under the “Liability management, customer complaint & redress management” of the customer experience standards (Appendix IV) as well as the CBN Consumer Protection Framework.
The bank shall approve appropriate liability models and redress mechanisms such as insurance, collateral requirements, pool industry funds, etc, for participants.
What are the provisions of the guidelines on the incident reporting portal?
The guidelines provide for the introduction of an incident reporting portal to enable easy and fast reporting by participants in the ecosystem concerning incidents that may affect participants, operations or the Open Banking system.