When First Bank set the pace for thoughts on Open Banking




At FIntech Summit 5.0 organised by First Bank of Nigeria, experts brainstormed on how best to make the Open Banking initiative work in financial service delivery, even as the FBN speaks on reasons for its intervention and the bank’s plans to remain atop the nation’s banking industry. AMAKA IFEAKANDU reports

First Bank of Nigeria Limited, Nigeria’s premier and leading financial service providers recently hosted  the fifth edition of its annual Fintech Summit with the discourse focusing on future of innovation in the financial technologies’ space.

Hosted virtually in line with the COVID-19 protocol, experts and key players, from within and without, gathered to  brainstorm on “Open Banking and its Derivative Opportunities for the Financial Ecosystem.”

While Professor Ndubuisi Ekekwe, the Lead Faculty, Tekedia Institute, featured as the key speaker, the panel discussion was handled by experts in financial and Fintech Industry.

The panellists were Ankit Sharma, director at  Strategy PriceWaterHouseCooper (PWC), Ope Adeoye,  Chief Executive Officer (chief plumber), One Pipe Service Ltd, Aminu Maida, Executive Director, Technology and Operations Nigeria Inter Bank Settlement System (NIBSS), representative from Central Bank of Nigeria (CBN) Olubukola Akinwunmi, Olayinka Situ, Chief Transformation Officer, FirstBank while Professor Olayinka David- West,  Associate Dean and professor of information systems /Lagos Business School featured as the panel’s  moderator.

Why First Bank hosts Fintech Summit 

Addressing participants at the event, FirstBank’s Managing Director/Chief Executive Officer, Dr Adesola Adeduntan,  said the Summit was organised to create a global platform for conversations around the future of innovation in the financial technology space. 

The summit, according to him, was designed to contribute to the rapid evolution in the banking and financial services segment of the economy. 

 He said  this year’s theme “promises to be exciting and engaging with a line-up of local and international thought leaders ready to spur the conversation around the prospects for open banking and  recognises the increasing pervasive role open data, cloud technology and artificial intelligence play in the financial ecosystem.” 

On the theme, Adeduntan said: “The summit gives us a very good platform to hear from leading experts in the space; because open data, cloud technology, artificial intelligence and the way they operate together to create the right environment for innovation or evolution is becoming important. 

“For us, Open Banking demonstrates the practical fusion of these variables presenting potentials that can redefine product development, customer experience and overall value creation within the financial services system.”

“The Regulatory Framework for Open Banking in Nigeria, issued by the Central Bank of Nigeria on the rules and premises under which financial data sharing can take place across the financial ecosystem and the National Information Technology Development Agency’s (NITDA) Nigerian Data Protection Regulation (NDPR) 2019, are demonstrations of the future of regulations around Open Banking,” the FBN chief further said.

“We believe there is enough space for continuous innovation and for us as an economy to rapidly embrace this in the view to materially upgrading the quality of financial services in Nigeria.

“As an institution that is over 127 years old, our bank has series of industry transformation and would continue to play a leading role in forging the conversations on refining regulatory frameworks and shaping the industry not just for open banking but for all contemporary issues to back our industry. 

“We will also continue to demonstrate our support for start-ups and innovators in the Fintech space by providing them with relevant data, support and infrastructure to enable them scale appropriately, through our SMEconnect platform,” he stressed.

 Open banking beyond banks     

Setting the tone for the discussion in his paper: ‘Open Banking: The Grand Unification of Application Utility Age,’ Professor Ekekwe said open banking is a platform where banks are required to share their market data through APIs, which are third party companies to help drive innovation.

He said: “As we moved from voice telephony to the mobile internet age, we upgraded that “intra-bank” to “inter-bank”, through NIBBS, offering a unified quasi-banking ordinance.” With open banking, Ekekwe posited, “this evolution goes beyond banks to now include insurance, mortgage, etc to drive the new age of application utility era which I expect to be massive.”

Continuing, the don said through APIs, different companies will have access to that customer, and if that was done, the frictions will be reduced across the nation on how to deal and offer services to the customers and such will be a great moment for the country. 

Ekekwe called for the development of the credit system to grow the economy, adding that open banking could create the credit architecture to help individuals rise in the economic ecosystem.

Reeling out the benefits, the financial guru said: “Open banking offers us a very important toll, it makes it possible for you to share customer data as a bank with trusted third-parties through APIs without any form of violation of privacy or risks. 

“It gives retail customers the opportunity that their data can be aggregated and with analytic system you can have an insight of what is happening within your banking experience. 

“There will not be a catalytic evolution in Nigeria’s economic architecture without a credit system, which is urgently needed for us to have the opportunity of expanding our economy. 

I believe that open banking through data aggregation and analytic system can also bring a national credit architecture that will make it possible for everyone of us to rise and imagine every person with a BVN will have a credit score.”

He said with better insight, “open banking improves customers experience, unlocks new basis of competition for members and unleashes perception level innovation.”

Describing open banking as grand unification of all the sectors, he said the expected success of the application utility era would  be anchored on the implementation of open bank.

Panellists’ views  

Taking their turns, the panellists looked at the various aspects of the novel idea and its workings.

In his view, Deputy Director, Payment System of the CBN, Mr Musa Jimoh, represented by Mr Olubukola Akinwunmi,  said  the framework looks specifically around the risk management that needed to be built. 

He said  when fully operational, “we will take care of the main concerns of customers and one of the main aspects of the open banking regime is the registry.”

Providing further insight into the regulatory framework, he said  “the current framework has already indicated that the bank will be engaging the industry stakeholders to come up with defined guidelines on how a number of the positions of the framework will be translated into operations.”

According to him,  open banking registry “will ensure transparency and ensure that customers can look up and know who they are dealing with.”

Jimoh told the gathering that the CBN had last year released regulatory framework, adding that the regulatory sandbox would soon be up.

He said the banking industry was set to go with the implementation of open banking, stating that “the framework is ready and before the end of the year the industry would be able to come together to kick off the Open banking.”

Making it work

Also speaking, a financial expert, Mr. Sharma noted  that for Nigerian banks to successfully engage the open banking operations, they must identify their areas of strength and ensure product and customer relationships top their agenda. 

“Banks must know which model will best work for them. Banks should know the kind of financial services and solutions they offer see how it works.” 

On what banks should do to get ready for the open banking operations, Sharma said they must work on technology, strengthen and government regulatory mechanisms and also sensitise customers on the benefits of open banking. 

He  said open banking has the  potential to  resolve credit issues in Nigeria, adding that among other things, banks needed to set up their digital and technology energies to drive the new era. 

Another panellist representing  First Bank, Mr Olayinka Shittu  said open banking required a lot of emerging skill, adding that one of the things that came with the advent of open banking  is the opportunity to collaborate.

He said,  “though banks are offering almost the same services but they need different work experiences and environment to operate open banking.”

For FBN, Shittu said, the mission is to maintain its leadership status  in the  banking landscape and in everything the bank does.

Shittu said what the bank needed is to bring before its customers value added, stressing that in the next three years, banking is going beyond payment and credit services.

He said that  the FBN was being positioned to make its customers comfortable whenever they want to conduct any  banking  transactions and provide seamless services.

“First Bank planned to take leadership position within the open banking system in the industry,” he said, adding that the bank will come up with strategies for customers to start engaging in this open banking.

In his own intervention, Mr  Maida says open banking is a game of  skill as its operation relies mostly on experts and expertise.

He expressed the need for the financial services providers to work together to reduce the cost of infrastructure.

He said: “It is necessary to provide Fintech infrastructure that would be suitable for everyone in the industry as they need to place all financial services providers within  the value chain.”

Rounding off the discussion, Professor David-West said with the FBN starting the conversation around open banking,   experts and operators should continue engaging to ensure the full implementation of its operations in the nation’s financial system.

She said open banking is a journey for embarking on the digital innovation.

While commending the FBN for the initiative, she expressed optimism that its implementation would contribute to the growth of economy and transformation of Nigeria’s banking sector.

Our future plans –FBN

In his concluding remarks, FBN Deputy Managing Director Gbenga Shobo said: “We are leaving this summit with recommendations on how to improve open banking in Nigeria and it is my understanding that suggestions from here will be circulated with relevant stakeholders for action. 

“Over the ages, there have been numerous scientific discoveries that seemed counterintuitive at their time but ended up shaping the overarching worldviews governing human reasoning.”  In his view,  “open banking has the potential to be such a discovery, capable of redefining innovation as we know it and pushing the delivery of financial services to new frontiers.

“FirstBank will continue to play its role in fostering thought leadership and innovation for the betterment of humanity. Our 127-year old culture of encouraging innovation drives us to always seek out and develop the next best solution capable of enhancing customer experience and value optimization across the markets we operate. We will continue to set the pace in the development of new trends that will define the future of banking and finance across the world.”