Nigerian banks must urgently modernize their systems to meet the August 2025 launch of open banking, global consulting firm KPMG has warned.
In a new report titled ‘Modernising Core Banking Systems,’ KPMG highlights the risks of clinging to outdated infrastructure as the Central Bank of Nigeria (CBN) prepares to roll out open banking—a system allowing secure sharing of customer financial data between banks and third-party providers (TPPs) via APIs (Application Programming Interfaces).
Why Open Banking Matters
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Customer Empowerment: Users can share transaction history, credit scores, and account details with approved fintechs for tailored services.
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Innovation Boost: Enables products like virtual accounts, smart cards, and instant cross-border payments.
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Financial Inclusion: Leverages alternative data (e.g., mobile usage, utility bills) to serve the unbanked.
The Looming Challenge
While fintechs and neobanks thrive on agile systems, traditional banks face a race against time:
“Legacy systems can’t support real-time, personalized banking. Digital-native rivals are already ahead,” KPMG noted.
The report urges banks to:
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Upgrade core systems for API-driven data sharing.
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Forge partnerships with fintechs to co-create services.
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Prioritize cybersecurity amid increased data mobility.
CBN’s Countdown
Since releasing the Open Banking Framework in 2021, the CBN has pushed for a collaborative financial ecosystem. With the 2025 deadline nearing, KPMG stresses:
“Delaying modernization risks losing customers to innovators.”
Key Takeaways:
Deadline Alert: Banks have 12 months to overhaul systems.
Fintech Threat: Digital-first players are outpacing traditional banks.
Opportunity: Open banking could expand financial access for 60M underbanked Nigerians.
The Bottom Line: Adapt or lose relevance in Nigeria’s fast-evolving financial landscape.
