An Evaluation of the Challenges of Implementing Open Banking in Retail Banking: A Case Study of Wema Bank, Abuja
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Background of the Study
Open banking represents a paradigm shift in the financial services industry, enabling secure data sharing between banks and third-party providers to foster innovation and enhance customer choice. At Wema Bank in Abuja, open banking initiatives are being introduced to break down traditional silos and offer customers a more integrated and flexible banking experience. By allowing authorized access to customer data through application programming interfaces (APIs), open banking creates opportunities for personalized financial services, innovative payment solutions, and enhanced product offerings (Okoro, 2023). This model not only drives competition but also encourages collaboration between banks and fintech companies, potentially transforming the retail banking landscape. However, the implementation of open banking is fraught with challenges, including data privacy concerns, regulatory uncertainties, and the need for robust cybersecurity measures. The complexities of integrating legacy systems with new API-driven architectures further complicate the transition, potentially disrupting service delivery. This study evaluates the challenges encountered by Wema Bank in implementing open banking, assessing both the technical and operational hurdles that must be overcome to realize its full potential, and exploring strategies to address these issues while ensuring customer trust and regulatory compliance (Chinwe, 2024; Akinola, 2025).
Statement of the Problem
Wema Bank faces significant obstacles in its open banking initiatives. Key challenges include the integration of disparate legacy systems with modern API frameworks, which can result in technical incompatibilities and service disruptions. Additionally, concerns about data security and privacy persist, as customers and regulators scrutinize the risks associated with sharing sensitive financial information with third-party providers. Regulatory uncertainty further complicates the environment, as evolving guidelines require continuous adaptation by the bank. Moreover, insufficient customer awareness and digital literacy impede widespread adoption of open banking services, limiting the potential benefits of enhanced service personalization and innovation. These challenges create a disconnect between the theoretical benefits of open banking and its practical implementation, ultimately hindering the bank’s ability to fully leverage data-driven innovations for improved customer service and competitive advantage.
Objectives of the Study
• To identify and evaluate the technical and operational challenges in implementing open banking at Wema Bank.
• To assess the impact of data privacy and regulatory issues on open banking adoption.
• To recommend strategies to enhance system integration, customer education, and compliance.
Research Questions
• What technical challenges hinder the implementation of open banking at Wema Bank?
• How do data privacy and regulatory concerns affect customer adoption?
• What strategies can improve the effective integration of open banking systems?
Research Hypotheses
• H₁: Integration challenges with legacy systems significantly hinder open banking implementation.
• H₂: Data privacy concerns negatively impact customer adoption of open banking services.
• H₃: Enhanced regulatory clarity and customer education improve open banking uptake.
Scope and Limitations of the Study
This study focuses on Wema Bank’s open banking initiatives in Abuja. Limitations include evolving regulatory frameworks, technical integration issues, and varying customer digital literacy.
Definitions of Terms
• Open Banking: A system where banks share customer data with third-party providers through secure APIs.
• Legacy Systems: Older computing systems that may not integrate easily with modern technologies.
• API (Application Programming Interface): A set of protocols for building and integrating application software.
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