By Chibuzo Roman Ani Esq


Technology in Banking cannot be eliminated; Fintech in the finance sector cannot be excluded; it’s a time and era, and it demands understanding, participation and inclusion.[1] The potential market for the users of fintech services is very broad essentially all of the adult population of the globe. The existence of fintech is inseparable from the free-market era. Adam Smith believes that the free market is given an advantage to every party. For Smith, the free market is suitable for the modern society and believed that the free market as the best system for modern economic society.[2] The resultant effect of the free market Regime will invariably lead to the need for an Open Banking Regime. A regime as such will make both Fintech companies and Incumbents role players in the financial economic space under the supervision of a regulatory body.

What is an Open Banking Regime?

The term “open banking” is loosely used by the media and the financial services industry to designate a range of data-sharing practices from bilateral data-sharing contracts and Financial Services Providers (FSPs) individually opening Application Programming Interfaces (APIs)[3] to voluntary private sector initiatives of collective data sharing (e.g., the open banking initiative in Nigeria and The Clearing House in the United States) and mandatory data sharing regimes (e.g., Open Banking in the United Kingdom and PSD2 in the European Union). Open banking-enabled products include consumer products and services that use data obtained through open banking to inform product design, for example, personal financial management, budgeting applications, and credit score monitoring services, among others.

We define an “open banking regime” as a consent-based data-sharing scheme mandated or supported by regulators toward the goal of creating competition and fostering innovation in financial services.[4]

Within an open banking regime, incumbent banks and FSPs (i.e., data holders) exchange consumer data with other FSPs and/or third-party providers (TPPs) (i.e., data users) on the basis of customer consent. Data sharing usually does not require a contractual relationship between data holders and data users. In addition, data users often are subject to a licensing/authorization framework or technical and security standards at the very least.

Open banking and financial inclusion

Open banking can help increase the number of relevant services and improve the quality of those services for people who already have a bank account but are underbanked. Further, if the data in scope for these regimes go beyond bank accounts and accounts with other FSPs such as mobile money accounts and include data from sectors such as utilities and telecoms (what we call open data), then these regimes may even support access to accounts and other services for the financially excluded. It is therefore critical that regimes wishing to support financial inclusion and to go beyond improving the value of financial services for the underbanked must focus on open data and embrace a broad scope of data exchange. Aside from bank account data, they must encompass mobile money account data and data from the utilities and telecoms sectors, among others.[5]


To ensure financial inclusion, and prevent institutional banking elimination, it is believable that the open banking system will be of great need in the economy. Advanced countries like China and UK, have created proper and efficient business models that can contain the emerging and merging of data distribution in and around their financial economy. To this extent they have made provisions for models and partnerships, supervision and regulation, and data protection of customer information. These advancements need to be put in place to ensure the success of such a visualized economy.

Nigeria as a budding forum in technology as well as a virgin plot in Fintech development will have to define its network of approach and system of regulation before it can successfully adopt the Open Banking Regime. This is not to say that it is impossible, but the need for such measures has to be satisfied if we are to ensure the success of this economic model in Nigeria.[6] Nigeria needs to develop and modify its system of regulation. The Central regulatory body for financial services in Nigeria is the Central Bank of Nigeria.

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[1] Gayatri Murthy and Xavier Faz, ‘Fintech and Financial Inclusion’ CGAP publ. 2021

[2] Hamzah, ’Financial Service Technology in Indonesia: Between Free Market Regime and Consumer Protection’, Fiat Justicia: Jurnal Ilum Hukum, [2020] 14 (1), 85-98

[3] Margaret Rouse, ‘Big Data Analytics, TECHTARGET’, <>(last visited January. 20, 2023). New application interfaces (APIs) will also increasingly allow customers to move from one service and platform to another, which will again increase the overall depth and quality of service provided at the same time as increasing competition. Application Programming Interface (API) is asset of commands, functions, protocols and objects that programmers can use to create software or to interact with an external system. It provides developers with standard commands for performing common operations so they do not have to write codes from scratch.

[4] Aridadne Plaitakis and Stefan Staschen, ‘Open Banking: How to design for Fiancial Inclusion’ CGAP publ 2020

[5] Ultimately, regulators are striving for better, less expensive and more ‘fluid’ financial services for all. Fluidity means more than just making account switching easier; fluidity will enable an SME to more easily obtain loan capital via a new fintech startup if that start-up has been granted access to the organization’s bank accounts, enabling them to make an offer based upon specific analysis of the SME’s transactions and requirements. Open Banking should make any and all such customer use cases easier, safer and better for everyone.

Ismail Chaib, ‘Regulating Open Banking: How regulators around the world are shaping the future of financial services’ OPENBANKPROJECT November 2018

[6] * One of the greater challenge to FinTech development as a whole is illiteracy, and this will have to be fiercely undertaken by the government if it is to ensure a smooth transition into the new age of technology.


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