This appeal was highlighted in the firm’s latest thought leadership report, Modernising Core Banking Systems: Navigating Challenges to Achieve Resilient Transformation, released on Thursday following its 2025 Core Banking Modernisation Summit. The report underscores the critical role of open banking in reshaping Nigeria’s financial services industry and stresses the urgent need for banks to upgrade legacy systems to remain competitive.
Open banking, which enables customers to authorise their financial data to be shared across institutions through secure Application Programming Interfaces (APIs), promises a more interconnected and customer-centric financial ecosystem. It allows third-party providers—such as fintechs, neobanks, and other banks—to access data like transaction histories, credit scores, and account details to create more tailored financial products and services.
According to KPMG, this transformation is not only technological but strategic. “Open banking is serving as a powerful catalyst for the growth and innovation of Nigeria’s digital-first financial players,” the report stated, citing use cases such as virtual account creation, seamless payment rail integrations, and personalised merchant gateways.
The firm noted that the emergence of open banking is a natural evolution from the collaborative momentum already visible among banks, fintechs, and neobanks. It highlighted how APIs have enabled innovations including card tokenisation, virtual card issuance, and cross-border payment networks—all paving the way for smarter, faster, and more secure banking experiences.
Crucially, KPMG warned that many incumbent banks still depend on outdated core systems ill-equipped to handle the demands of API-driven integration. As customers increasingly demand real-time, personalised digital services, traditional banks risk falling behind newer digital challengers who are building their platforms from scratch—free of the "technical debt" that legacy systems carry.
“Traditional institutions must confront a stark reality: legacy systems can no longer support the agility, innovation, and resilience that the future demands,” the report stated. It added that the question for banks is no longer whether to modernise, but how to modernise effectively.
Open banking, KPMG argues, could also accelerate financial inclusion in Nigeria. By leveraging alternative data sources—such as mobile usage, utility bill payments, and even social media behavior—institutions could provide financial services to a broader demographic, especially those outside the formal banking system.
The Central Bank of Nigeria (CBN) first issued its regulatory framework for open banking in February 2021, laying the groundwork for the sector's transformation. After years of groundwork and pilot projects, the CBN recently confirmed that a full-scale launch is slated for August 2025.
KPMG's report concludes with a strong recommendation for Nigerian banks: begin future-proofing core banking systems today. The firm emphasised that successful adoption of open banking will require more than just regulatory compliance—it demands robust technological readiness, strategic partnerships, and a willingness to embrace a more open, data-driven financial ecosystem.
With less than a year to go before the formal rollout, KPMG’s message is clear: modernisation is not optional—it is the foundation for surviving and thriving in a rapidly evolving financial landscape.