As Nigeria transitions to an open banking regime, we anticipate a wave of fintech innovation driven by secure and regulated access to customer data. While this access presents significant opportunities for product development, it is governed by strict regulatory safeguards. In this update, we outline key considerations for fintechs seeking to responsibly and lawfully leverage open banking APIs to access customer data.
1.Understanding Customer Data Categories
The categories of information that a fintech (as an API Consumer) can access from a bank depend on the data tier and the scope of customer consent. The CBN groups data into four broad categories, each with increasing sensitivity and regulatory requirements. The first category is Product Information and Service Touchpoints (PIST). This includes non-sensitive, public information such as a bank’s branch locations, ATM networks, interest rates, account types, loan offerings, and applicable charges. Because this data is publicly available, fintechs can access it without requiring customer consent. This category of data can potentially enable useful applications such as branch locators, price comparison tools, and market aggregators.
The second category is known as Market Insight Transactions (MIT). This consists of anonymized, aggregated data that reflects overall transaction trends, consumer behavior patterns, and market segmentation insights. Although this data is not tied to any specific individual, fintechs must still handle it in line with data protection principles. While customer consent is not required, fintechs must comply with privacy rules to ensure no individual can be re-identified from the dataset. These insights are particularly valuable for product development, strategic planning, and market research.
More sensitive is the third category, Personal Information and Transactional Data. This includes identifiable customer details such as name, BVN, phone number, email address, account balances, transaction histories, and loan obligations. Access to this data requires explicit and informed consent from the customer, and fintechs must implement clear and auditable consent mechanisms in compliance with both the Open Banking Guidelines and Nigeria’s data protection laws. Fintechs commonly use this type of data to offer personalized financial management tools, alternative credit scoring models, payroll and tax services, or targeted lending products.
The final and most sensitive category is referred to as Sensitive Financial Information (SFI). This encompasses data such as direct debit instructions, standing orders, investment holdings, collateral records, pension contributions, and tax identification details. Given the heightened risk associated with this information, fintechs must not only obtain explicit customer consent but also demonstrate additional technical and organizational safeguards. Use cases include investment platforms, wealth management dashboards, automated tax services, and cross-platform portfolio monitoring tools.
2. Registering on the Open Banking Registry (OBR)
Nigeria’s open abnking regaultions require fintechs to be listed on the CBN’s Open Banking Registry (OBR). The OBR serves as the official directory of approved participants, ensuring transparency and regulatory oversight. Registration involves submitting corporate information, demonstrating technical capability, and agreeing to comply with the Open Banking Framework. It is useful to note that only fintechs listed on the OBR are legally permitted to consume APIs from banks and other data providers.
3.Building and Certifying API Integration
Nigeria’s open banking regulations require Fintechs to develop their systems to interact seamlessly and securely with banking APIs. This involves adopting prescribed technical standards, including RESTful architecture, OAuth 2.0 for authorization, and TLS encryption. The CBN requires fintechs to undergo testing, which may include sandbox environments or certification processes, to ensure their API integrations meet performance, security, and interoperability benchmarks before going live.
4.Executing Legal Agreements with Banks
Nigeria’s open banking regulations requires contractual relationships between fintechs and banks to be documented. These agreements typically include API access terms, service-level commitments, liability and indemnity clauses, and data usage restrictions. They provide a legal framework to manage expectations and responsibilities between the parties, and help resolve any disputes that may arise during data sharing and integration.
5. Deploying a Consent Management System
Nigeria’s open banking regulations requiries access to personal and sensitive customer data to be backed by clear, auditable consent. Thus, Fintechs are required to build consent management systems that allow customers to grant, monitor, and revoke permissions at any time. Such consent must be explicit, purpose-driven, and time-bound, with revalidation required after periods of inactivity. This step is not only central to compliance with open banking rules but also to Nigeria’s broader data protection laws under the Nigeria Data Protection Act.
Conclusion
It is useful to note that Nigeria’s open banking regulations allow other businesses other than fintechs to access customer data from banks and other API providers. Also, the term API Provider is not limited to traditional banks and applies to any regulated entity that stores, processes, or originates financial data, and is willing to make that data available to others via secure APIs.
Balogun Harold insights are shared for general informational purposes only and does not constitute legal advice. For tailored guidance, please contact our Technology Lawyers at bhlegalsupport@balogunharold.com
