Come 2024, the financial sector, mostly the commercial banks will start giving access to their customers’ data with third party providers.
This includes customer transaction data, uptake of financial service, averaged data of balance information and ATM locations.
The data will be used for insights, value addition, and the development of other services.
The Bank of Namibia (BoN) announced in its Position Paper on the Feasibility of Open Banking in the country.
“The financial sector and the public are hereby informed to be ready to participate in Open Banking initiatives by March 2024,” BoN said.
The banking sector regulator has also indicated that Open Banking in Namibia should be adopted through a regulatory-led approach.
Thus, the central bank intends to issue standards to ensure that Open Banking is adopted in a safe environment that promotes innovation, competition, and fairness, among others.
Open Banking is the sharing and leveraging of customer-permissioned data by banks with third party providers (TPPs) to build applications and services
Such services and applications that can provide real-time payments, greater financial transparency for account holders, marketing and cross-selling opportunities.
In simple terms, Open Banking will allows TPPs and other financial service providers to access customer data at banks to provide customers with other value added financial services not offered by banks.
Open Finance is an extension of Open Banking which allows third party data exchange to affect a broader variety of financial goods and services.
“It is important to note that the consumer must explicitly give consent to share their information,”the bank explained.
In turn, consumers have better control over their data and more choices in a comprehensive legal framework will be developed for the adoption of Open Banking, assured the regulators.
Open Banking offers numerous benefits such as providing the underbanked with access to an array of financial services and allows for the formation of new business models that meet customer expectations.
“Open Banking has the potential to transform financial services (including payments), broaden financial service offerings, and improve customer convenience and experience,” the bank said.
Open API Standards which include specifications that inform the design, development, API management and maintenance of an API.
Security Standards- this refers to the security aspects of the API specification.
In an Open Banking ecosystem, custodians of customer data i.e., banks and other financial institutions may be vulnerable to greater risk exposure when interfacing with TPPs that are not authorised.
In this regard, the BoN’s anticipated regulation on Open Banking will ensure that TPPs are authorised and assigned roles and responsibilities to ensure that those sharing data and their customers are not exposed to risks and that the open APls used are always safe and secure.
The central bank has also indicated that it will not support, nor will it endorse exclusive agreements between participants for the sharing of customer data in an Open Banking ecosystem.
As for the Payments Association of Namibia it will be required to establish an Open Banking Forum for industry and other stakeholders as may be necessary to discuss issues of mutual interest pertaining to Open Banking and facilitate consultations on the Bank’s position paper.
Additionally, the Forum should be tasked with formulating consumer education and awareness initiatives to sensitize on the benefits of Open Banking and the role of industry, FinTechs and the public. Email: firstname.lastname@example.org