Distributed Ledger Technology (DLT) is being adopted by the banking sector all around the world, and now Nigeria – the most populous African nation – is looking to jump on the DLT bandwagon. The Central Bank of Nigeria (CBN) has begun putting plans into motion to implement an open banking system, which would allow developers to create solutions for people to manage multiple accounts from a centralized platform.
More Transparency for Banking Customers
By implementing an open banking system, more providers would be able to develop systems that allow users to manage their accounts from one location, which means there is more financial transparency for banking customers. The APIs available would allow banking customers to see far more data about each transaction they make, including fees involved. This will then in turn allow such people to be able to use accounts strategically to save money on each transaction – maximizing their finances.
Nigeria Turning to Crypto
Unfortunately, the national currency of Nigeria – the Naira – is being sold on fewer and fewer foreign exchanges, meaning companies are starting to refuse it as a method of payment. This has forced many entrepreneurs who deal with international suppliers to begin using Bitcoin over traditional currencies. The CBN has limited which foreign exchanges can buy and sell the Naira, meaning even getting USD can be tough. If the CBN wants its new open banking system to be a success, this is a major issue that it needs to address.
Banks Turning to DLT
In a bid to make payments faster and reduce fees for customers, banks from all around the globe have been turning to DLT for a helping hand. While it’s slightly different from the goals of the CBN, the very same DLT that it’s using can also be used to speed up transactions. Saudi British Bank has teamed up with Ripple to deploy DLT in its banking systems to help speed up cross-border payments, making them virtually instant. The process used to take days and cost a small fortune, but now thanks to Ripple’s platform these transactions are completed in seconds and cost a fraction of a cent. This could be a solution to virtually all of the CBN’s issues.
It’s going to be some time before Nigeria sees an open banking system come into place, as it needs to develop regulations first. The plan was announced as part of the CBN’s Payment Systems Vision 2030 agenda, meaning we still have a long way to go before CBN plans to deploy it.