By HiPipo Money

Consumer‑permissioned data sharing is sweeping across the continent. With Nigeria leading the charge, regulators and innovators must balance the promise of greater innovation, competition and inclusion against serious questions about data privacy, security and the future of banking.

Africa’s digital finance revolution has always been rooted in people, in the traders who adopted mobile money when banks ignored them, in the informal businesses that used airtime transfers as working capital and in the mothers who kept their savings secure through mobile wallets rather than under mattresses. Today, a new revolution is taking shape, one that goes beyond mobile transactions to the very way data flows between institutions. This is the world of open finance: a model in which customers can authorise their banks, insurers and mobile‑money providers to share financial data with third‑party innovators through secure, standardised APIs. In Lagos, a young fintech founder named Sola dreams of building an app that helps market traders compare loans, budget cash flows and access credit from multiple lenders. Until recently, those traders’ financial data were locked inside siloed bank systems. But in April 2025, the Central Bank of Nigeria (CBN) announced that it would launch an open‑banking regime, culminating in operational guidelines published in March 2023, making Nigeria the first African country to implement open banking. The initiative opens the door for innovators like Sola by mandating that banks expose data through secure APIs, subject to customer consent, enabling third parties to build new services and fostering competition and interoperability.

The seeds of open finance could only sprout in the fertile soil of Africa’s digital payments boom. Sub‑Saharan Africa accounts for roughly two‑thirds of all mobile‑money transactions worldwide and, by 2021, about one‑third of adults had mobile‑money accounts. This widespread digital adoption has created immense datasets about spending, saving and borrowing. At the same time, it has revealed how much more could be achieved if those datasets were portable. Open finance promises to do just that, allowing consumers to “take control of their data in the financial system and gain the ability to share it with other providers”. According to the World Bank’s Digital Finance Inclusion knowledge base, open finance reduces switching costs, reduces information asymmetries and levels the playing field between large incumbents and small entrants. By enabling broader access to a wider range of financial services – credit, insurance, investment, pensions, it has the potential to “significantly enhance financial inclusion”. It is not simply a technical evolution of open banking but a radical rethinking of who owns financial data and how it is monetised.

Nigeria’s early move reflects both ambition and necessity. For decades, Nigerian banks treated customer data as proprietary. Customers seeking to switch banks or obtain a loan from a fintech had little power to port their transaction history. The CBN’s framework and accompanying operational guidelines, developed from 2021 onwards, are designed to change that by establishing consent management processes, central registries and security protocols. Consent must be explicit, time‑bound and easily revoked; an encrypted token reflecting the scope of customer rights must accompany every API call. The guidelines cover a broad scope of services, including payments and remittances, deposit taking, credit, personal finance management and even credit scoring. Eligible participants range from banks and FinTechs to non‑bank entities such as fast‑moving consumer goods companies and payroll bureaus. By creating an Open Banking Registry to monitor participants and requiring service‑level agreements to ensure reliability, the CBN hopes to foster an ecosystem where data flows securely and innovations flourish.

The move has global resonance. In November 2024, a coalition of international organisations, including the World Bank, IMF, Bank for International Settlements and the United Nations Secretary‑General’s Special Advocate for Financial Health, published a high‑level “Key Considerations for Open Finance” to guide regulators. Their press release called open finance the next frontier of financial services, noting that 76 per cent of the world’s population already has access to a basic transaction account and that open finance can expand the use and benefits of those accounts. Her Majesty Queen Máxima, the UN Special Advocate, emphasised that open finance must be shaped in a way that benefits those who have been financially excluded or underserved. Ajay Banga, President of the World Bank Group, declared that done right, open finance could be “a game changer” capable of bringing financial services to people who traditionally had none and of providing capital to “80 million more women entrepreneurs” who currently lack it. These statements underline the extraordinary expectations riding on data sharing frameworks.

Proponents argue that open finance empowers customers by enabling them to authorise data sharing without bilateral contracts between institutions. As the IMF release explains, customers can give consent for a financial institution to share their data with another institution, reducing information asymmetry and fostering a more competitive market. With the ability to access and combine data from multiple banks, insurers or mobile‑money providers, FinTechs can offer more tailored products: a credit‑scoring platform can incorporate salary payments, remittance flows and mobile‑wallet activity to provide fairer loans; an investment app can aggregate savings and pension balances into a single dashboard; a digital insurer can pre‑fill application forms using verified data. This empowerment extends to micro and small enterprises (MSEs) and women‑owned businesses, allowing them to compare offers and negotiate better terms.

Yet the same mechanism that promises empowerment also carries new risks. When data flows multiply, the attack surface for hackers widens and the potential for misuse grows. The IMF release warns that open finance can “bring new or enhanced risks” because more data is exchanged between financial providers, heightening “data security, protection, and privacy” concerns. The guidelines call on public authorities to balance consumer protection with innovation and to monitor whether dominant players from other sectors – for example, large technology platforms- gain access to financial data without reciprocity. Agustín Carstens, the BIS general manager, notes that the benefits of open finance can only be realised if accompanied by “adequate regulation and safeguards”. This caution resonates strongly in Africa, where data protection laws and enforcement capacities vary widely and where digital literacy remains uneven.

In fact, context matters as much as ambition. A synthesis note by the Cape‑Town‑based think tank Cenfri, produced in partnership with Rwanda’s central bank and Zambia’s central bank, warns that global approaches to open finance are not always appropriate for African markets. Open finance comes with costs and risks, particularly because highly sensitive personal information becomes shareable; to avoid exacerbating inequalities, African regulators must tailor strategies to local conditions rather than copy‑pasting frameworks from the UK or Brazil. For example, smartphone‑based consent models may work in Europe, but Africa’s relatively low smartphone penetration means alternative methods, such as USSD menus, agents or voice interfaces- will be necessary. Cenfri’s note also highlights that open finance rollouts are long‑term endeavours unfolding over five to seven years: first building foundational infrastructure, then piloting use cases, scaling up with large institutions and eventually expanding to sectors like insurance and pensions. Case studies in Rwanda and Zambia show that readiness levels differ across countries and that local capacity‑building is essential.

This context underscores that open finance is not a silver bullet for inclusion. To succeed, it must ride on well‑designed digital public infrastructure such as national identity systems, interoperable payment rails and secure data‑sharing platforms. The World Bank emphasises that open finance must support competition by ensuring smaller players can meet standards for APIs and by adopting phased approaches. Pricing policies matter: volume‑based data access fees can put small fintechs at a disadvantage, while bilateral pricing agreements may discourage participation. When digital markets are already dominated by a handful of mobile‑money operators, as is the case in several African countries, regulators will need to pay close attention to avoid entrenching incumbents. Conversely, well‑designed frameworks could unleash a wave of specialised firms, from rural micro‑insurers to climate‑risk analytics platforms, that can compete because they can access customer‑permissioned data.

Nigeria’s example offers both inspiration and caution. The open‑banking guidelines are explicit about consent: customers must provide time‑bound, explicit consent, and there must be an option to opt out. The framework categorises data into four classes, product information, market‑insight transactions, customer information and transactional data, each with its own risk level. API providers must publish performance metrics and abide by dispute‑resolution procedures. At the same time, the guidelines emphasise accessibility and interoperability across technologies and organisations. This ambition requires significant investment in API gateways, cybersecurity, audit processes and consumer education. For many African banks and FinTechs, the cost of compliance may be high, raising questions about whether smaller institutions can keep up and whether a slow, phased approach might be necessary. The introduction of Nigeria’s open‑banking registry also raises a host of governance issues: Who manages the registry? What liability falls on an API provider if a downstream player misuses data? These questions will need clear answers to build trust.

Beyond Nigeria, other African jurisdictions are moving cautiously towards open finance. The Bank of Ghana released a draft open‑banking directive in 2024, building on its Payment Systems Strategy and seeking to accelerate digital innovation while protecting consumers. In South Africa, the Financial Sector Conduct Authority (FSCA) has issued policy recommendations on open finance, noting that it is an evolution of open banking and extends data sharing beyond payment initiation to a wider scope of financial products and consumer data. Kenya’s fintech ecosystem, anchored by mobile‑money giant M‑Pesa, is exploring open APIs with prudence; regulators there remain focused on data privacy rules and have warned that screen‑scraping practices could be replaced by more secure API standards. Namibia and Zambia are working with Smart Africa and Cenfri to assess feasibility and design context‑appropriate frameworks. These parallel efforts point to a pan‑African conversation about how to harmonise standards without sacrificing local nuance.

Underlying this conversation is a deeper question about the very nature of data ownership. Should consumers control their data, essentially renting it out to providers, or does data become a shared resource for the financial system? In the mobile‑money era, providers accumulated vast transaction histories without necessarily granting consumers visibility into how that data was used. Open finance shifts the paradigm by requiring consent and transparency. But in a region where women are nine percentage points less likely than men to own a phone, and where literacy barriers persist, a purely digital consent regime could exclude millions. Open finance must therefore be designed alongside initiatives to close the gender digital divide, expand device access and build financial literacy.

The stakes extend beyond consumer apps. Open finance could profoundly reshape cross‑border trade and regional integration. The African Continental Free Trade Area (AfCFTA) aims to reduce barriers to goods and services; open finance could complement that by facilitating cross‑border financial services through harmonised data‑sharing standards. Initiatives like the Pan‑African Payment and Settlement System (PAPSS) already allow businesses to settle trade in local currencies; open finance could enable cross‑border credit scoring, factoring and insurance. For small exporters in, say, Kigali or Abidjan, being able to share transaction histories with a foreign lender could unlock working capital. Meanwhile, digital public infrastructure such as interoperable QR codes and national digital identities would provide the rails on which open finance rides.

Ultimately, the success of open finance in Africa will depend on trust. Regulators must craft clear, enforceable rules that protect consumers without stifling innovation. Banks and FinTechs must invest in robust APIs, cybersecurity and consumer education. Consumer groups and civil‑society organisations must advocate for inclusive design that serves women, rural communities and people with disabilities. International partners must avoid imposing one‑size‑fits‑all models and instead support local capacity building. The promise is vast: better products, more competition, deeper inclusion and a financial ecosystem that reflects the dynamism of Africa’s markets. But the risks are equally real. As Nigeria begins its open‑banking experiment and other countries draft their own rules, Africa has the chance to pioneer a version of open finance that is equitable, secure and truly transformative.

Open finance is more than a technical project; it is a reimagining of who controls financial data and how value is created from it. In a region where mobile money has already brought millions into the digital economy, making data portable could unleash waves of innovation and competition. At the same time, the concentration of data in the hands of a few players could entrench inequalities or expose consumers to new forms of exploitation. By examining Nigeria’s early experiments, global guidelines and context‑specific insights from Rwanda and Zambia, we understand that success will require careful regulation, robust digital infrastructure and a relentless focus on inclusion.