Summary: Eight months ago (March 2018), I wrote an article about the flaws of the NUBAN account system implementation in Nigeria. Two weeks ago, Central Bank of Nigeria (CBN) released a draft proposal to review NUBAN implementation in line with the recommendations from my article, taking it a bit further.
> NUBAN—Nigerian Uniform Bank Account Number
About two years ago, I got the opportunity to contribute my quota to the adoption of Open Banking in the Nigerian financial industry.
I did this from my corner at GTBank by helping to re-position the Bank’s corporate payment solutions as democratised APIs for consumption by FinTechs and MSMEs.
It was a challenging experience; from convincing senior management to embrace long-term, win-win partnerships with FinTechs (seeing them as enablers not only as competition); to getting the right support from the Bank’s technology team to enable us implement and go-live on these APIs.
Integrating the bank’s payment APIs with these FinTechs revealed a myriad of technical issues; and in analysing these issues, I realised that the way NUBAN was implemented in Nigeria was a major hinderance to progress.
> API—Application Programming Interface. It's a way to technically extend the capabilities of a platform (e.g FinTech's) by leveraging that of another platform (e.g Bank's).
There were cases of the same NUBANs existing in different banks; with increasing occurrences as more NUBANs are generated. This possibility of having the same account number show up in different banks defeats the purpose of NUBAN as a unique bank account identifier in Nigeria.
As it stands, NUBAN’s “uniqueness” depends on a customer’s conscious combination of bank codes or names with an account number. Even at the API level, there is a need to supply both a bank code or name and an account number before a particular bank account is reached.
Given these challenges, I recommended a practical solution to include the 3-digit unique bank code to the current 10-digit NUBAN, thereby making NUBAN 13 digits. This way, the NUBAN can be unique, and vastly expandable to accommodate exponentially larger instances of NUBAN. Below is a snapshot of the proposal:
Eight months later, the CBN has not only considered this proposition, but it has also issued a draft of how it plans to revise the implementation architecture of NUBAN in alignment with this recommendation.
The apex bank has gone further to introduce three extra digits taking the tally to 16 digits (i.e. from Step 5 above, the CBN is introducing three preceding zeros as a buffer for when more Banks, MFBs and OFIs are incorporated for business).
This implementation will further ease integrations between banks, OFIs, FinTechs and the many MSMEs that will embrace open banking for the development of innovative financial services to Nigerians.
Also, CBN is doing this to rubber-stamp its strategy to open up NUBAN issuance to more non-DMBs, implying that you may not need to hold a bank account before you have a "NUBAN" number. However, funds (value) transactions will happen across issuers and providers within the ecosystem.
This is good news for wallet-based FinTechs who were previously excluded from generating NUBANs. Now, they can move money directly to a bank account (or another NUBAN) directly via NIBSS without having to create a Pool account at a DMB for this purpose.
One of the expected criticism of this new approach is that the string of numbers to remember has become "too long". This is anticipated but there is comfort in the fact that before the coming of NUBAN in 2010, Nigerians had to remember 12 to 15-digit account numbers due to the uniniform account numbering nomenclature in use by several banks.In those days, Banks’ account number system depended hugely on the architecture of their core banking applications).
I believe the CBN considered critical feedback and recommendations on how to reposition NUBAN to achieve it’s intended aim of unifying account number nomenclature in Nigeria. And this highlights the importance of independent contribution to the general body of knowledge for the advancement of underlying infrastructure (standards, policies and procedures) that power financial service delivery in Nigeria. If implemented right, I believe this will position NUBAN as the truly unique, unified account numbering system that will be the bedrock for the CBN National Financial Inclusion strategy outlined in its CBN-funded Shared Agent Network Expansion Facility (SANEF) initiative.
About the Author
'Dewale Otolorin is a technology consultant at global consulting firm, Accenture in the United Kingdom.
He has a core banking experience of about 6 years working at GTBank and has served as a bridge between Technology and Business Groups over the past 9 years in the consulting, financial, technology and professional services industries. He is experienced in positioning banking services and payment APIs for integration with SMEs and financial services-inclined multinationals.
A version of this article appeared here.