In 2016, I was asked to be head of data standards for the open banking Implementation Entity (OBIE) which was undoubtedly the most difficult assignment I’ve been a part of due to the timelines and the calibre of the stakeholders involved.
But, together with my talented peers, the first trustee (may he RIP) and the programme director, open banking was first delivered to the world from the UK.
But, at the time, it was seen as all parties involved trying to deliver a regulation, a mandate. What we never imagined was that this would be a global movement that would mean much more than a regulatory check box. Open banking is seen as the biggest collaborative innovation ever in the financial sector involving financial institutions, fintechs and regulators.
As an example of this, I just returned from Nigeria where I gave a masterclass on open banking and spoke on a panel during Lagos Fintech Week. This is my third trip to Nigeria in just under 12 months and the difference in their understanding and application on this subject has advanced substantially. My first visit was with the Lord Mayor of London as part of his delegation which was the first time that many in Nigeria had heard of open banking as we met with government officials, bank C level representatives and some fintechs.
Fast forwarding to April 2019 where during the conference last week I was able to sit back and listen to numerous speakers, from government officials, senior bankers, regulators to senior fintech board members embracing open banking and wanting to see this implemented as a way to tackle social/financial inclusion and corruption. They truly understand the three key pillars of open banking; common data standards, strong regulatory framework, and collaborative innovation.
To further support the collaboration that would occur from this initiative, Nigeria has one of the most advanced fintech sector that could easily compete with most fintech communities in other so-called advanced countries. This is coupled by banks that are not afraid (yes, not afraid) to collaborate with fintechs of all sizes as they do not have the restrictive procurement processes that we have in the UK which will continue this way into the foreseeable future (I will definitely write a separate piece on this). In 2017 Open Banking Nigeria was formed as a non profit organisation that looked at the UK as a model of what could be for Nigeria. We have since partnered with them to assist on this journey.
If it isn’t social and financial inclusion that will convince people of the opportunity, banks and fintechs should see the commercial opportunity of open banking in this country. With Nigeria having a population of over 190 million people that can be accounted for, of which only 30 million are considered banked, there is a commercial opportunity with open banking to identify products and services to serve 160 million (unbanked) people and counting. To further support this opportunity, of that population over 50% are under the age of 30 with the scale of 0-4 years old accounting for 30 million people on their own. So, the opportunity of providing innovative products to young people is even a greater opportunity.
I do not want to hear that the levels of poverty in Nigeria are so low that this makes it commercially unattractive. 140 million people in Nigeria use cellphones. This means that people in poverty still found a need for cellphones and are willing to pay for that service. Open banking allows for creative, collaborative innovation where we will jointly come up with products and services that will create social inclusion erasing the banked/unbanked demarcation lines to a certain extent of course.
With the Nigerian government and the Central Bank of Nigeria embracing this initiative last week during the conference, together with the key points mentioned above, I look forward in being a part of the journey to bring open banking to Nigeria.