Introduction
Prior to the advent of open banking, lenders have long relied on a mix of credit bureau data, bank statements, employment records, and increasingly, alternative data sources to assess borrower risk. However, these inputs have often been fragmented, difficult to verify in real time, and unevenly accessible across institutions. For digital lenders in particular, this has translated into underwriting models that are functional but constrained, requiring a blend of proxies, assumptions, and risk premiums to bridge persistent data gaps.
Open banking does not replace existing credit assessment mechanisms; it enhances them. By enabling the secure, consent-driven sharing of verified financial data across institutions, it introduces a layer of interoperability that has been largely absent in Nigeria’s lending market. The opportunity is not simply better data, but more timely, standardised, and portable data, capable of supporting more dynamic and predictive credit scoring models.
In our earlier article, Beyond Credit Scores: The Rise of AI-Driven Lending in Nigeria, we examined how artificial intelligence is reshaping credit decisions through alternative data and machine learning models. This edition of TALP’s TechBrief turns to data infrastructure that makes this possible. Open banking provides the channels through which richer financial data flows can be securely shared, while AI helps lenders analyse that data. Together, they support a shift from broad estimates of credit risk to more precise, data-driven lending decisions.
The Open Banking Framework
The Central Bank of Nigeria issued Africa’s first Regulatory Framework for Open Banking in February 2021, followed by the Operational Guidelines for Open Banking in March 2023. The Guidelines established a centralised Open Banking Registry, maintained by the Nigeria Inter-Bank Settlement System, and a consent management system through which customers’ permissions can be recorded, monitored, and revoked. Every institution intending to participate must register through this framework, and consent management is anchored to the Bank Verification Number.
An August 2025 target for national go-live was deferred, with the CBN citing the need for a fully automated system with robust data protection and consumer safeguards before switching it on. The CBN’s Fintech Report, published in February 2026, set out a clearer roadmap to accelerate the rollout across three implementation phases, and the phased go-live is now expected to unfold through the middle of 2026.
Who Open Banking Affects
While the framework is often discussed in technical terms, its effects fall on three distinct groups.
- API Providers: Under the 2023 Guidelines, this refers to a participant that uses API to make data or service available to another participant. An API Provider can be a licensed financial institution/service provider, a Fast-Moving Consumer Goods (FMCG) Company or other retailers, Payroll Service Bureau etc.
- API Consumers, Digital Lenders and Fintechs: This refers to a participant that uses API released by the API providers to access data or service. An API Consumer can be a licensed financial institution/service provider, an FMCG or other retailers, Payroll Service Bureau etc.
- Consumers (i.e., Data Subjects/Borrowers): At the centre of the framework are the customers themselves, whose data is being shared. The system is fundamentally consent-driven. A consumer must explicitly authorise the release of their financial data before any API Consumer can access it. This consent is recorded, monitored, and can be withdrawn at any time through the centralised consent management system maintained by NIBSS.
What This Means for Digital Lenders
Open banking is expected to reshape how digital lenders develop products, assess and price risk, recover debts, and compete for customers.
1. Debit Mandate and Debt Recovery: The CBN’s 2023 Operational Guidelines for Open Banking identify debit mandates (mandate signed by customer to participate in open banking) as one of the consent types that may be shared through the open banking framework. Once properly executed, a debit mandate may provide creditors and their banks with standardised and verifiable information that supports repayment and recovery processes. This could complement the CBN’s Global Standing Instruction (GSI) mechanism, under which participating creditor banks may recover overdue obligations from a borrower’s qualifying accounts held with other participating financial institutions through infrastructure operated by the Nigeria Inter-Bank Settlement System. Any recovery action must, however, remain within the scope of the customer’s valid mandate and the applicable regulatory requirements.
2. Faster and Verified Credit Decisions: Instead of relying on self-reported income or uploaded bank statements that can be altered, lenders will be able to pull verified transaction histories directly from a borrower’s bank the moment consent is granted, cutting underwriting time from days to minutes. The effect on Nigeria’s credit bureau industry may be mixed. Direct access to transaction data could reduce lenders’ dependence on credit bureaus for certain aspects of a borrower’s financial history. However, it also presents an opportunity for credit bureaus to strengthen their existing credit-scoring, monitoring, and recovery products by incorporating real-time transaction data. The ultimate effect will depend on how quickly credit bureaus adapt, and whether lenders choose to use enhanced bureau products or develop simpler in-house underwriting systems for straightforward, transaction-based credit decisions.
3. Lower Non-Performing Loan Risk: Because a lender will be able to see whether an applicant already carries existing credit obligations elsewhere, the loan-stacking behaviour that has driven up default rates across the sector becomes far harder to conceal, giving lenders a genuine tool for managing non-performing loan ratios rather than merely pricing around the risk.
4. Product Innovation and Personalisation: Richer, standardised data sets create opportunities to design more tailored credit products, including income-linked repayment structures, revolving credit lines, and embedded lending solutions. Lenders can move beyond one-size-fits-all offerings to risk-based pricing and personalised credit limits.
5. New Compliance and Registration Obligations: Participation as an API Consumer will require formal registration within the Open Banking Registry, adherence to CBN technical and security standards, and the implementation of robust consent management workflows aligned with the NIBSS framework. These obligations will operate alongside existing requirements under the Nigeria Data Protection Act (NDPA) 2023, increasing the compliance and governance burden on lenders.
In practice, this regime is not yet operational: NIBSS has been confirmed as operator of the Registry, participation will require a CBN licence. The commercial launch initially expected in August 2025 did not occur as planned. The CBN’s February 2026 report instead indicated that implementation would proceed in phases through mid-2026. The available technical specification was developed by industry participants, and it expressly states that it is not a legal framework. Given the time that has elapsed since the Framework and Guidelines were issued in 2021 and 2023 respectively, lenders should treat the relevant operational requirements as forthcoming, rather than fully live, and should allow for the possibility of further delays.
6. Shift in Competitive Dynamics: Early adopters that integrate open banking infrastructure effectively may gain an advantage through better data access, faster decision cycles, and more accurate risk pricing. Conversely, late adopters may face adverse selection, as lower-risk borrowers gravitate towards providers offering faster and more suitable products, leaving less sophisticated lenders with a disproportionate share of higher-risk applicants.
7. Dependence on Ecosystem Reliability: Open banking introduces reliance on third-party infrastructure, including API providers and the central consent management system. Downtime, latency, or integration failures could disrupt credit assessment, disbursement, servicing, and recovery processes. Lenders will therefore need appropriate contingency arrangements, technical redundancy, incident-response procedures, and contractual service-level protections.
The Digital Lending Landscape Ahead
Open banking is being introduced alongside, rather than replacing, the existing regulatory oversight of Nigeria’s digital lending sector. Under the Federal Competition and Consumer Protection Commission’s Digital, Electronic, Online and Non-Traditional Consumer Lending Regulations, 2025, app-based and online lenders must register with the Commission and comply with its consumer protection requirements. Enforcement has intensified since the compliance deadline expired in January 2026. As of January 2026, 457 registered lenders had received full approval to operate, with 35 more under conditional approval, and non-compliant operators on a regulatory watchlist (about 103 loan apps) facing fines of up to N100 million or 19% of annual turnover alongside possible director disqualification for up to five years.
Together, the FCCPC and CBN regimes point towards a more transparent, responsible, and data-driven lending market. The FCCPC Regulations govern how digital lenders conduct their operations and treat borrowers, while the CBN’s open banking framework will influence how lenders access and use customer data when making credit decisions. Lenders that approach both regimes as part of an integrated compliance and strategy exercise, rather than as separate boxes to tick, will be better positioned as the market matures.
A Readiness Roadmap for Digital Lenders
With the phased rollout underway, digital lenders and fintechs should treat open banking readiness as a business priority rather than a future concern. Boards and management teams should consider the following steps.
- API and Systems Readiness: Assess existing technology infrastructure against the CBN and NIBSS technical and security standards, including message-level security and encryption requirements, to confirm systems can integrate with the national API standard once access opens. The Appendix to the 2021 Open Banking Framework contains guiding standards for API, technical design, data, and information security specifications.
- Consent Management Design: Build consent flows that are informed, granular, and easily revocable, and that align with the centralised consent management system, so that every access request and withdrawal is properly recorded and auditable. Appendix I to the 2023 Open Banking Guidelines provides the necessary guidance for organisations to structure their consent frameworks as required for Open Banking purposes.
- Data Protection and Security Alignment: Ensure data handling practices meet obligations under the Nigeria Data Protection Act, and that cybersecurity measures, including incident response and disaster recovery planning, meet the standards set out in the Operational Guidelines.
Looking Ahead
Open banking has influenced credit markets in jurisdictions where it has been effectively implemented. In the United Kingdom, where open banking has operated under a mandatory framework since 2018, shared financial data has supported the development of budgeting, credit-assessment, and lending tools. Brazil’s phased rollout, which began in 2021, developed into a broader open-finance regime, encouraging established banks to improve their services and enabling fintech companies to develop more inclusive credit products.
Nigeria’s framework points in a similar direction, but implementation has not kept pace with its ambition. The delay does not appear to result solely from a lack of technology. Several major Nigerian banks, including Sterling Bank, Guaranty Trust Bank and Access Bank, already operate APIs. The more significant challenge is achieving industry-wide coordination. Where institutions develop separate standards and systems, interoperability becomes more difficult, and the cost of implementing a common solution increases. The CBN has also identified the need for a fully automated system supported by adequate data-protection and customer-control mechanisms before commercial rollout.
However, the implementation period offers a strategic opportunity. Prospective participants can use this time to assess their API capabilities, design effective consent-management systems, address data-governance gaps, and align their compliance arrangements with the emerging regulatory framework. Organisations that prepare early will be better positioned to participate effectively when the system becomes operational, while those that wait for complete certainty may be left to catch up.
The direction of the market is becoming clear. The remaining question is which organisations will be ready to take advantage of the opportunity when Nigeria’s open banking framework becomes fully operational.
