Project – Effect of Open Banking on Customer Financial Behaviour in Nigeria. A Study of United Bank for Africa Plc, Lagos

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The financial services industry has undergone significant transformation as digital technologies have changed the way customers access, use and manage financial services. Banking customers increasingly interact with financial institutions through mobile applications, internet banking, electronic payment platforms and other technology-enabled channels. These developments have expanded the speed, convenience and accessibility of financial services while also changing the way consumers make financial decisions. Digitalisation can influence customers’ perceptions, preferences and patterns of saving, spending, borrowing and payment, making customer financial behaviour an increasingly important issue in modern banking. Bello (2022) notes that financial digitalisation has changed the structure and operational paradigm of financial systems as well as users’ perceptions and experiences, while the International Monetary Fund (IMF, 2023) identifies digital financial services as an increasingly important component of financial inclusion and financial-service delivery in Nigeria. Open banking represents a further development in the digital transformation of financial services. It enables customers to authorize regulated third parties to access specified financial information or initiate financial services through standardized application programming interfaces (APIs). The Central Bank of Nigeria (CBN, 2023) explains that open banking in Nigeria is based on the principles of customer ownership and control of financial data and the customer’s ability to grant authorization to service providers for access to innovative financial products and services. The framework covers areas including financial inclusion, customer identification, credit scoring and other banking-related services. By enabling controlled data sharing among banks and other authorized participants, open banking is intended to support innovation, competition and wider access to financial services (CBN, 2023).

The development of open banking has important implications for customer financial behaviour because access to consolidated and personalized financial information can influence the way customers make financial decisions. Open banking can allow customers to connect financial accounts, obtain alternative financial products, receive personalized financial recommendations, access credit and make payments through third-party applications. Evidence from international research indicates that open banking can increase competition and facilitate new financial-service relationships by allowing customers to share transaction information with other financial providers. Babina et al. (2025) found that open banking facilitates customer-authorized sharing of financial transaction data and can encourage fintech entry, while Parlour, Rajan and Zhu (2023) demonstrate that customer-controlled financial data sharing can affect competition and credit-market outcomes. These developments suggest that open banking can potentially change customers’ financial choices by increasing the range of information and financial alternatives available to them.

In Nigeria, the relevance of open banking is particularly significant because the country has a rapidly developing digital-financial ecosystem and a large population of bank and financial-service users. The CBN introduced the Regulatory Framework for Open Banking in Nigeria in 2021 and subsequently issued Operational Guidelines for Open Banking in 2023. The framework seeks to create a standardized environment for data sharing and financial innovation while emphasizing customer consent, privacy, security and risk management. The IMF (2023) similarly identified open banking as part of Nigeria’s broader digital-financial-services development, noting that the framework facilitates data exchange among banks and non-bank providers through API technology. Consequently, open banking represents an important institutional development that may affect how Nigerian customers access and use financial services.

Customer financial behaviour encompasses the ways individuals manage financial resources through activities such as saving, spending, borrowing, investing, budgeting, making payments and managing financial obligations. Financial behaviour is influenced by access to information, financial literacy, income, technology, trust, convenience and the characteristics of available financial products. The CBN (2024) emphasizes the importance of financial literacy and consumer protection in enabling customers to understand financial products, exercise their rights and make informed financial decisions, while evidence from Nigeria shows that income, age and information-and-communication-technology orientation can affect individuals’ access to and use of banking services. Open banking may therefore influence financial behaviour by changing customers’ access to information, financial products, payment mechanisms and personalized services, although the direction and magnitude of such influence require empirical investigation (CBN, 2024; Efobi, Beecroft, & Osabuohien, 2014).

The potential behavioural consequences of open banking are also reflected in evidence concerning digital financial inclusion and customer adoption. Recent cross-country evidence suggests that adoption of open banking can increase participation in digital payments, although its effect on the frequency of digital banking transactions is not necessarily uniform across users. The study also indicates that benefits may be particularly relevant for groups that previously had lower participation in digital financial services (Economics Letters, 2026). In Nigeria, emerging research on open-banking acceptance has identified accessibility, trust and security as important factors associated with customer acceptance of open banking. These findings suggest that open banking may influence customer behaviour not only through the availability of financial products but also through customers’ perceptions of convenience, security, trust and control over their financial information (Ogbobine et al., 2026; Economics Letters, 2026).

United Bank for Africa Plc (UBA) provides an appropriate institutional setting for examining the relationship between open banking and customer financial behaviour because of its extensive digital-banking operations and large customer base. UBA has continued to invest in technology-enabled banking services, including online banking, mobile banking, digital customer-service platforms and other electronic channels. The bank’s 2023 sustainability report indicates that it provides online and mobile banking services designed to give customers access to banking services at different times and locations, while its 2024 financial results report continued growth in customer deposits alongside technology-led initiatives aimed at improving customer experience. These developments provide an important context for investigating whether open-banking-related digital capabilities influence the way UBA customers manage their financial activities.

The Lagos environment is particularly relevant to the study because Lagos is one of Nigeria’s major financial, commercial and technological centres, with extensive interaction among banks, fintech companies, businesses and digitally active consumers. UBA’s presence within this environment places the bank within an ecosystem in which customers can increasingly access multiple digital financial products and services. Open banking can potentially increase the connectivity between banks and third-party financial-service providers, thereby giving customers more opportunities to compare products, manage accounts, initiate payments and access financial services. However, the CBN’s regulatory framework also emphasizes that open banking participants must comply with security, privacy, customer-experience and risk-management requirements, indicating that customer trust and responsible data use are central to the development of the ecosystem (CBN, 2023).

The relationship between open banking and customer financial behaviour can consequently be examined through several behavioural dimensions, including savings behaviour, spending behaviour, borrowing behaviour, payment behaviour and financial planning. When customers can access more comprehensive financial information and alternative financial products, they may be able to compare costs, monitor transactions and make more informed decisions. Conversely, increased convenience and access to credit or payment services could also change spending and borrowing patterns. Evidence from open-banking research shows that customer data access can improve the ability of financial providers to assess customers and develop new financial relationships, but privacy concerns and differences in customer preferences may also affect the outcomes of open banking (Babina et al., 2025; Parlour et al., 2023). Therefore, the influence of open banking on financial behaviour should not be assumed to be uniformly positive or negative but should be established through empirical investigation.

1.2 Statement of the Problem

The rapid expansion of digital financial services has created new opportunities for Nigerian bank customers to access financial products, make payments, save, borrow and manage their finances. However, increased digital access does not automatically guarantee responsible or informed financial behaviour. The IMF (2023) reports that Nigeria continues to face challenges relating to financial exclusion and financial literacy despite progress in digital financial services. Similarly, the CBN (2024) recognizes financial literacy and consumer protection as important requirements for enabling customers to make informed financial decisions. This creates a concern about whether emerging technologies such as open banking actually translate into improved financial behaviour among bank customers.

A second problem concerns the relatively new nature of open banking in Nigeria. Although the CBN introduced the Regulatory Framework for Open Banking in 2021 and Operational Guidelines in 2023, the Nigerian open-banking ecosystem is still developing. The CBN framework establishes principles for customer-authorized data sharing and requires participants to observe privacy, security, operational and customer-experience standards. However, the existence of a regulatory framework does not by itself demonstrate how customers respond to open banking or whether access to shared financial information changes their actual financial behaviour. The limited amount of longitudinal Nigerian empirical evidence on open banking has also been identified in recent research as an important gap in the literature (CBN, 2023; Aki et al., 2026).

A further problem relates to the behavioural implications of greater access to financial information and services. Open banking may provide customers with greater opportunities to compare products, monitor accounts, access credit and initiate payments, but the effect of these opportunities on saving, spending, borrowing and financial planning may differ across customers. Recent Nigerian evidence indicates that trust, security and accessibility are important factors in open-banking acceptance, while international evidence shows that open banking can influence financial-market participation and customer access to financial services. However, these findings do not establish conclusively how open banking affects the day-to-day financial behaviour of customers of a particular Nigerian bank such as UBA (Ogbobine et al., 2026; Babina et al., 2025).

The specific problem addressed by this study is therefore the need to establish the effect of open banking on customer financial behaviour in Nigeria, with United Bank for Africa Plc, Lagos, as the case study. Although UBA has invested significantly in digital banking and customer-facing technology, there is a need for empirical evidence on whether developments associated with open banking influence customers’ saving, spending, borrowing, payment and financial-management behaviour. The study will therefore investigate the effect of open banking on customer financial behaviour and provide evidence that can contribute to understanding customer responses to the emerging open-banking ecosystem in Nigeria.

1.3 Objectives of the Study

The general objective of this study is to examine the effect of open banking on customer financial behaviour in Nigeria, using United Bank for Africa Plc (UBA), Lagos, as a case study.

The specific objectives are to:

1. Examine the effect of open banking on customers’ saving behaviour at United Bank for Africa Plc, Lagos.
2. Determine the effect of open banking on customers’ spending and payment behaviour at United Bank for Africa Plc, Lagos.
3. Assess the effect of open banking on customers’ borrowing and credit-management behaviour at United Bank for Africa Plc, Lagos.
4. Examine the effect of open banking on customers’ overall financial-management behaviour at United Bank for Africa Plc, Lagos.

1.4 Research Questions

The study will be guided by the following research questions:

1. What effect does open banking have on customers’ saving behaviour at United Bank for Africa Plc, Lagos?
2. What effect does open banking have on customers’ spending and payment behaviour at United Bank for Africa Plc, Lagos?
3. What effect does open banking have on customers’ borrowing and credit-management behaviour at United Bank for Africa Plc, Lagos?
4. What effect does open banking have on customers’ overall financial-management behaviour at United Bank for Africa Plc, Lagos?

1.5 Research Hypothesis

The following null hypothesis will be tested at the 0.05 level of significance:

H₀: Open banking has no significant effect on customer financial behaviour at United Bank for Africa Plc, Lagos.

1.6 Significance of the Study

The study will be significant to United Bank for Africa Plc (UBA) because it will provide empirical information concerning how open banking may influence the financial behaviour of its customers. The findings may assist the bank in developing customer-centred digital financial services that respond to customers’ actual financial-management needs.

The study will also be useful to bank customers because it will provide greater understanding of how open banking and data-enabled financial services may affect saving, spending, borrowing, payment and general financial-management practices. Such knowledge may contribute to more informed engagement with digital financial services.

The study will be relevant to the Central Bank of Nigeria and other financial regulators because it will provide evidence concerning customer responses to the open-banking ecosystem. The findings may assist regulators in assessing issues relating to customer protection, data privacy, security, financial literacy and responsible innovation.

The study will also benefit fintech companies and other financial-service providers because open banking depends on interaction among banks, fintech companies and other authorized participants. Understanding customer financial behaviour may assist providers in designing services that are relevant, transparent and responsive to customers’ needs.

The study will contribute to academic literature on open banking, digital finance, financial inclusion and consumer financial behaviour in Nigeria. Since Nigeria’s formal open-banking framework is relatively recent, institution-specific empirical evidence remains important for understanding how the system affects customers.

Finally, the study will be useful to students and future researchers in banking and finance, accounting, business administration, economics and related disciplines. It may provide a basis for further studies on open banking adoption, customer behaviour, financial literacy, digital financial inclusion, data sharing and fintech development in Nigeria.

1.7 Scope of the Study

The study focuses on the effect of open banking on customer financial behaviour in Nigeria, using United Bank for Africa Plc (UBA), Lagos, as the case study.

The study will specifically examine open banking in relation to four aspects of customer financial behaviour: saving behaviour, spending and payment behaviour, borrowing and credit-management behaviour, and overall financial-management behaviour.

The study will focus on customers of UBA within Lagos. It will examine customers’ experiences and perceptions concerning digital and data-enabled financial services and how these may influence their financial decisions and practices.

The study is limited to open banking and customer financial behaviour. It does not attempt to examine the entire fintech industry or all dimensions of digital banking. Other issues such as cybersecurity, financial inclusion and customer satisfaction may be discussed where relevant but will not constitute the principal dependent variables of the study.

1.8 Operational Definition of Terms

Open Banking: A financial-service model that allows customers to authorize regulated third parties to access specified financial data or services through standardized and secure APIs.

Customer Financial Behaviour: The actions and decisions through which customers manage their financial resources, including saving, spending, borrowing, making payments, budgeting and managing financial obligations.

Saving Behaviour: The tendency and practices of customers concerning setting aside money, maintaining savings balances and making regular contributions toward future financial needs.

Spending Behaviour: The manner in which customers make decisions concerning the use of their income and available financial resources for goods, services and other expenditures.

Payment Behaviour: The patterns through which customers make financial payments and transfers, including their use of electronic and digital payment channels.

Borrowing Behaviour: The manner in which customers obtain, use and manage credit facilities and other forms of borrowed funds.

Credit Management: The practices through which customers manage loans and other credit obligations, including borrowing decisions, repayment and monitoring of outstanding obligations.

Financial Management Behaviour: The broader practices through which customers plan, monitor and control their financial resources, including saving, spending, borrowing, payment and budgeting decisions.

Application Programming Interface (API): A technological interface that allows different software systems to communicate and exchange specified information or services according to established technical rules.

Customer Consent: The customer’s authorization permitting an eligible financial-service provider or third party to access specified financial information or services under the applicable open-banking framework.

United Bank for Africa Plc (UBA): A major Nigerian banking institution and a pan-African financial-services group that provides banking and digital financial services to individuals, businesses and other customers.

Project – Effect of Open Banking on Customer Financial Behaviour in Nigeria. A Study of United Bank for Africa Plc, Lagos