Dentons ACAS-Law Webinar: Open Banking Will Help Deepen Financial Services

The issuance of the Regulatory Framework for Open Banking in Nigeria 2021 and the Operational Guidelines for Open Banking in Nigeria in 2023 by the Central Bank of Nigeria and launch of open banking, will help deepen financial services and drive financial inclusion in Nigeria. This was the submission of Mr Gbenga Haastrup, speaking as a Panelist at the Webinar recently hosted by Dentons ACAS-Law with the theme, ‘Open Banking as a Catalyst for Accelerating Nigeria’s Financial Services Development’, which held on June 22, 2023.

The second Panel at the event which was focused on regulatory and compliance issues with regard to Open Banking in Nigeria, comprised Mr Gbenga Haastrup, GRC Leader and former General Counsel and Chief Compliance Officer of the Interswitch Group; Habib Akinpelu, Legal and Compliance Manager at Okra; and Rasaq Kadri, Head of Compliance at Kuda; and was moderated by Dr Sanford Mba, Partner at Dentons ACAS-Law.

Mr Haastrup commended the Open Technology Foundation for advocating for and driving the adoption of open banking in Nigeria, as well as the Central Bank of Nigeria for issuing the Guidelines, the first by a Regulator in Africa. He stressed that for open banking to be successful, there needs to be a major mindset shift by industry stakeholders, and deliberate effort put into educating consumers about the opportunities/benefits of open banking. He also emphasised the need for industry players to upgrade legacy systems, and conduct system upgrades in readiness for open banking.

He stated that whilst open banking would drive growth in innovation and new/improved financial products and services, one of the critical success factors for consumer acceptance would be for Fintechs and financial services providers to provide assurance to consumers that they have put robust processes, systems and controls in place to deal with associated risks and fraud, and ensure compliance with regulations on cybersecurity, data security and privacy (including the NDPA 2023), thereby, gaining the trust and confidence of consumers.

Rasaq Kadri drew a distinction between having regulations in place and actual compliance by industry operators, and stated that although progress has been made, many industry players are yet to achieve an appreciable level of compliance with privacy and data protection requirements, and this remains a major concern. He also highlighted that, managing customer consent is another critical factor that needs to be managed effectively.

Habib Akinpelu did a comparison of the NDPR and the recently passed NDPA, and emphasised the need for the CBN to ensure that products designed for open banking are in compliance with regulations. He however, cautioned that quality product development will not come cheap, and will entail financial investment.