CBN: Get Customer’s Permission Before Sharing Personal Data

CBN: Get Customer's Permission Before Sharing Personal Data
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The Central Bank of Nigeria’s new guideline for open banking which was released on Wednesday, March 8, 2023, has asked all banks and other financial institutions to seek consent from customers before sharing their data.

The new operational guidelines in circular PSM/DIR/PUB/001/043,  contain a set of principles to guide data sharing across the banking and payment ecosystem while establishing better access to customer-centric data-sharing systems between banks and third-party companies.

CBN aims at enabling secure interoperability in the banking sector, allowing third-party payment services and other financial institutions and service providers access to banking transactions and related data from banks and financial institutions.

The guideline also mandates banks to keep an open banking registry which allows regulatory body supervise and regulate banks and financial institutions thereby promoting transparency in the industry.

Banks are also mandated to seek customers’ approval before sharing their data and this data is made available and can be obtained for open banking products and services.

CBN’s Director of Payment System Management, Musa Jimoh disclosed to reports that the guidelines will further stabilize the financial system and improve the bank’s directive.

“The adoption of open banking in Nigeria will foster the sharing of customer-permissioned data between banks and third-party firms to enable the building of customer-focused products and services. It’s also aimed at enhancing efficiency, competition, and access to financial services.” He said.

This development is coming on the back of recent complaints made by customers to the CBN about data leaks to third parties such as loan apps and other fintech companies, who have exploited the hole in the financial security system to disclose customers’ information seeking permission first from the customers.