Why did Open Banking Nigeria build an open-source gateway, and why now?
At the core of Open Banking is the need for API connectivity — the infrastructure that allows third-party providers to access financial data. As Open Banking Nigeria inches closer to full implementation, a challenge emerges. Every bank and financial institution will need a proprietary Front-End Processor (FEP) or API gateway to handle requests and transactions. The big question: Should each institution build its system from scratch? OBN realized that waiting for each bank to develop its proprietary gateway would be costly, slow, and inefficient. This is even more critical as the financial industry in Nigeria has lost a significant number of home grown experts to the Japa syndrome.
So they took a different path: they built a free, open-source API gateway that any bank or fintech can use, modify, and deploy at will. This open-source gateway eliminates the high barriers to entry for smaller banks and fintechs, leveling the playing field. Instead of expensive, complex proprietary software, banks can adopt a pre-built, fully compliant solution without the need for costly development.
The idea was inspired by the success of the Postillion system in Nigeria’s card industry, which thrived because it was affordable, simple, and well-supported
In the same vein, the open-source API gateway provides a ready-made infrastructure, enabling banks to focus on innovation rather than scrambling to meet regulatory demands. This initiative has the backing of industry giants like Paystack, Sterling Bank, Lendsqr, Sparkle, Flutterwave, OnePipe, and KPMG, among others. It has also been stress-tested by industry stakeholders like Dexter Awoyemi and Demi Odetara from Pledre.
Making this plug-and-play solution open-source speaks to the heart of Open Banking Nigeria’s mission: fostering a collaborative and inclusive financial ecosystem.
Spotlight read: Open Banking in Action via APIs (What next: Part 3 of 3)
What Open Banking gateway is not: clearing misconceptions
While the Open Banking gateway developed by Open Banking Nigeria has garnered significant attention, it’s important to clarify what it is not to dispel any confusion around its purpose and functionality.
Not a centralized software
One common misconception is that this gateway will act as a single, centralized system for all financial players. This is not the case. The gateway is an open-source software that banks, fintechs, and other financial institutions can download and customize to serve as their entry point into the open banking ecosystem. Each entity maintains control over how they implement it, ensuring flexibility and independence.
Not a commercial product
Unlike many proprietary systems in the industry, the Open Banking Gateway will never be sold. It operates under a GNU General Public License (GPL), meaning any institution that uses or modifies the software is obligated to share any improvements back with the broader financial community. This ensures continuous innovation and improvement across the entire ecosystem, creating a collaborative environment.
Not a regulatory body
Finally, it’s essential to understand that Open Banking Nigeria is not a regulator. It is an industry player representing a broad consortium of financial stakeholders in Nigeria who are advocating for open banking. Its goal is to provide the tools and frameworks needed to enable open banking, not to enforce compliance. Regulatory oversight remains the domain of entities like the Central Bank of Nigeria (CBN).
The prospects ahead
The open-source gateway promises a solution for Nigerian banks and a model that could be adopted across Africa, positioning Nigeria as a leader in emerging financial and inclusive innovation. Africa stands on the verge of a financial revolution that could dramatically increase financial inclusion, particularly among hundreds of millions of unbanked adults.
For banks and fintechs, this means a chance to innovate faster, compete smarter, and deliver better customer experiences. With industry stakeholders and regulatory bodies like the CBN on board, the open-source API gateway will be pivotal in ensuring that Nigerian financial institutions are ready for the future.
This open-source approach is not just about technology; it’s about enabling an open, accessible, and inclusive financial ecosystem for everyone. It’s a bold move that could reshape the future of banking not only in Nigeria but across Africa. For updates on the latest in open banking in Nigeria, details on membership opportunities, or participation inquiries, you can contact the dedicated OBN team at [email protected].
