Open Banking in Nigeria: What It Means for Data Privacy and Security
Open Banking in Nigeria is no longer a futuristic concept. It’s here, and it’s reshaping the financial landscape.
In 2022, the country’s fintech sector experienced a remarkable 197% growth, primarily driven by innovations enabled through Open Banking. By 2023, the Central Bank of Nigeria (CBN) had formalized the process with its official operational guidelines, unlocking a new era of data-driven financial services.
It’s a bold and necessary leap, but it comes with risks.
As data becomes the foundation of digital finance, the key question is this: Can Nigeria unlock the full potential of Open Banking without compromising consumer data privacy?
Let’s unpack the promise and the responsibility.
What Is Open Banking in Nigeria, and Why Is It Gaining Momentum?
Open Banking allows financial institutions to securely share user-permitted data with licensed third-party providers through APIs (Application Programming Interfaces).
This enables apps that can help you budget more effectively, receive loan offers faster, or manage multiple bank accounts in one place.
Why Nigeria Is Going All-In
In 2021, the CBN released its regulatory framework for Open Banking, followed by detailed operational guidelines in 2023.
The goal? To accelerate financial inclusion and digital innovation, particularly in a country where over 45% of adults remain unbanked.
Unlike the EU’s PSD2, which evolved in a mature financial ecosystem, Nigeria’s model is designed to expand access and foster competition.
It’s already empowering fintechs like Kuda, OPay, and Flutterwave, which utilize secure APIs to offer a range of services, including microloans, instant payments, and merchant services.
If you’re new to API-based digital systems, check out our guide on Digital Transformation in Nigeria for insights into how emerging technologies are transforming businesses.
The Data Privacy Imperative in Open Banking
Sharing financial data comes with high stakes. Transaction history, account balances, and credit scores. This isn’t just personal information—it’s intimate financial details.
Do Nigerians Trust This Shift?
Not fully. A 2023 Stears Data report found that 72% of Nigerians say data privacy significantly influences their choice of fintech platforms.
- Trust isn’t a given. It must be earned.
- And the cornerstone of that trust is consent.
How Consent Works in Open Banking
Open Banking must be opt-in, not opt-out. This means:
- Informed consent: Users should know what is being shared and why
- Granular control: They should pick which data is shared (e.g., account balance but not full transaction history)
- Easy revocation: They should be able to withdraw access at any time
Some platforms are already doing this right. OPay, for example, allows users to revoke connected app access directly in its settings dashboard—a simple, transparent approach to data control.
The four pillars below illustrate how data privacy principles are being applied in Open Banking in Nigeria:
Aligning NDPR with CBN’s Open Banking Rules
The future of Open Banking in Nigeria depends on how well the NDPR and CBN rules converge.
Nigeria’s Data Protection Regulation (NDPR), enforced by the Nigeria Data Protection Commission (NDPC), is the country’s baseline for digital privacy. It applies to all entities—including banks, startups, and service providers—that collect or process personal data.
Key NDPR Principles
- Consent and lawful processing
- Purpose limitation and data minimization
- Right of access, correction, and deletion
- Penalties of up to 2% of gross annual revenue for violations
Where It Intersects with CBN’s Open Banking Framework
CBN’s guidelines focus on the technical and operational aspects of secure APIs, registry access, and performance benchmarks.
NDPR provides the ethical and legal backbone, especially regarding user rights.
Together, they form a strong regulatory stack. But challenges remain:
- Data Retention Ambiguity: How long can fintechs store shared data?
- Consent Revocation Workflows: What happens if a user revokes consent during a live transaction?
The CBN and NDPC are reportedly exploring joint implementation guidelines to resolve these grey areas—an approach we covered in detail in Data Protection Compliance in Nigeria.
Security Requirements Under the CBN’s Guidelines
CBN mandates a range of security provisions to ensure data doesn’t just move—it moves safely.
API Security and Encryption
All APIs must implement industry-standard protocols, such as OAuth 2.0 (a secure way for apps to access bank data without sharing passwords) and Transport Layer Security (TLS) encryption, which protects data in transit.
Open Banking Registry (OBR)
A CBN-maintained directory that only permits accredited API providers and consumers to interact within the ecosystem.
This registry ensures only verified, compliant participants can access the Open Banking network.
Risk Management Standards
Participants are required to adopt globally recognized standards, such as ISO 27001, and implement regular risk assessments.
They must also report any data breaches within the specified timeframes outlined in CBN guidelines.
Risks of Open Banking in Nigeria: Where Data Can Be Exposed
Even with controls in place, Open Banking introduces new risk surfaces, particularly with third-party integrations.
Real-World Threat Scenarios
- Third-Party App Vulnerabilities: In 2022, a Nigerian lending app faced regulatory scrutiny for transmitting unencrypted user data, resulting in a temporary suspension and reputational damage.
- Token Misuse: Expired tokens, if not properly revoked, can be intercepted by malicious actors, leading to unauthorized access to sensitive data.
- Poor Consent UX: Apps that bury permissions behind confusing language or multiple screens create risk by design, not by accident.
These concerns echo findings from our Cybersecurity Trends for Nigerian Businesses in 2025 report, which identified data breaches as a growing economic threat.
Best Practices for Open Banking in Nigeria: Security and Compliance
To thrive in this new era, institutions must treat data protection as a strategic advantage—not just a compliance checkbox.
Security and Compliance Checklist
API Security:
- Use OAuth 2.0 and TLS encryption for all API communications
- Conduct quarterly penetration testing to identify vulnerabilities
- Adopt ISO 27001 or similar security frameworks
- Implement API rate limiting and monitoring
Consent Management:
- Provide user dashboards for reviewing and revoking data access
- Clearly summarize what data is shared and with whom
- Maintain auditable logs of all consent activity
- Make consent language simple and accessible
Collaboration:
- Create shared security frameworks between banks and fintechs
- Coordinate real-time incident response procedures
- Establish communication protocols for breach notifications
- Participate in industry security working groups
NDPR Alignment:
- Appoint a qualified Data Protection Officer (DPO)
- Conduct regular Privacy Impact Assessments (PIAs)
- Train staff on data protection and cybersecurity hygiene
- Document all data processing activities
Trust Is the New Currency
In Open Banking, privacy isn’t just about compliance—it’s also about gaining a competitive advantage.
Brands like Paystack have proven that clear data practices and honest communication foster customer loyalty.
As more Nigerians become privacy-aware, trust will be the deciding factor, not just features or fees.
“In Nigeria’s Open Banking revolution, security isn’t a barrier—it’s the bridge to trust.”
Frequently Asked Questions
Conclusion: From Compliance to Competitive Advantage
Ultimately, Open Banking in Nigeria will only succeed if consumers feel their data is safe, respected, and in their control.
Success won’t be driven solely by speed or scale.
To unlock real value, Nigeria’s fintechs, banks, and regulators must move from compliance as a checklist to privacy by design—where trust isn’t earned by accident but engineered from the start.
The regulatory foundation exists. The technology is proven. The market opportunity is enormous.
What remains is execution: building Open Banking systems that prioritize user control, maintain rigorous security standards, and create transparency at every step.
For fintechs navigating this new frontier, the right blend of compliance and trust-building is more than good practice—it’s your edge.
For more on navigating Nigeria’s evolving digital landscape, see our analysis of Nigeria’s digital economy and the future of IT solutions in Nigeria.
Related Reading
- Data Protection Compliance in Nigeria: Strategies for Businesses
- Cybersecurity for Nigerian SMEs: Protecting Your Business
- Digital Transformation in Nigeria: What’s Working and What’s Not
- Navigating the Nigeria Data Protection Act 2023
Stay Informed on Nigeria’s Fintech Evolution
At PlanetWeb, we track developments in Open Banking, data protection, and financial technology to help businesses navigate Nigeria’s evolving digital finance landscape.
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