Open banking: CBN cautions Nigerian banks, fintechs on cybersecurity dangers 

The Central Bank of Nigeria (CBN) has warned Nigerian banks and fintechs to be cautious of cybersecurity dangers as they transfer into open banking.

The Director of Funds System Coverage on the CBN, Mr. Musa Jimoh, gave this cost whereas talking through the Q2 Regulators Discussion board of the FintechNGR themed, “Past Compliance: Unlocking Innovation with Nigeria’s Open Banking Framework”. 

In line with him, banks and fintechs want to take a position closely in cybersecurity as open banking entails the sharing of shoppers’ information, which could possibly be compromised by hackers if not effectively protected.

“There have been so many instances of knowledge breach around the globe, and open banking shouldn’t be a door, an open door for cyber criminals to come back in, which is why the safety round our APIs, the safety round our cost infrastructure, round our information must be hermetic. We have to make it unbreakable and really, very onerous for criminals to crack,” Jimoh instructed monetary companies suppliers.

Defending customer information 

Jimoh famous that what monetary service suppliers can be doing in open banking is principally exposing their customer account data to a trusted third celebration with the consent of the customer.

• He stated they have to ensure that the customer understands what she or he is granting entry to and what will probably be used for.
• In that regard, he stated information safety can be essential as cybercriminals might make the most of the system.
• In line with him, all of the monetary service suppliers might want to do a whole lot of sensitization to coach their prospects in opposition to cybercriminals who could wish to use open banking to defraud them.

“Please be aware of safety round your prospects as a result of we don’t need the cybercriminals to latch onto these and start to ship messages that, ‘with a purpose to enroll you in open banking, it is advisable ship a PIN.’ That you must do a whole lot of sensitization on this regard. 

“Safety, privateness, and client safety are very very important to a profitable open banking implementation,” he stated.

“The customer have to be effectively knowledgeable to know what she or he has granted. We shouldn’t carry prospects to grant one thing that they by no means knew was what they had been granting.  

So, it must be very simplified, and we have now to guard the privateness of the customer and make sure that we don’t unduly expose them to cyber criminals.” Jimoh added.

Standardization of API 

On its half, Jimoh stated the CBN is engaged on the standardization of the appliance programming interface (API) for open banking to make sure that each participant interacts with the platform in the identical manner.

“This may make sure that the best way a service supplier, a fintech, is making a name for account stability in a single bank is identical for one more bank, which makes it very straightforward for integration. 

“You don’t have to start out adopting every normal of the banks; you get your system configured, and you’ll be able to connect with any bank that you’re granted entry to,” he stated.

What you must know  

Nigeria turned the primary African nation to determine an open banking regime after the CBN launched its open banking operational pointers on 7 March 2023, outlining guidelines on how banks and different monetary establishments will entry and deal with customer information.

• Open Banking permits the sharing of customer-permissioned information between banks and third-party companies.
• This method permits banks to securely share their customer information with third-party firms, equivalent to fintech and different monetary service suppliers, with the consent of their prospects.
• This sharing of knowledge is completed by way of APIs, which act as a bridge between the bank’s methods and people of the third-party companies.
• As soon as a customer provides their consent for his or her information to be shared, the third-party agency can entry their information by way of the bank’s APIs.

This information contains details about the customer’s transactions, account balances, and different related data. The third-party agency can then use this information to develop modern services which can be tailor-made to the customer’s wants.