CBN Moves to Strengthen Regulation of Fintechs  

Deputy Governor, Financial System Stability Department, Central Bank of Nigeria (CBN), Mrs. Aishah N Ahmad
Deputy Governor, Financial System Stability Department, Central Bank of Nigeria (CBN), Mrs. Aishah N Ahmad

Kunle Aderinokun, Obinna Chima, Ndubuisi Francis, Nume Ekeghe and Nosa Alekhuogie, in Washington DC

The Central Bank of Nigeria (CBN) said it has taken steps to enhance the regulation of the activities of financial technology (fintechs) companies in the country.

The Deputy Governor, Financial System Stability, CBN, Mrs. Aishah Ahmad, said this yesterday, during a session on, “Cybersecurity Exercises: Experience from Sub-Saharan Africa,” on the sidelines of the ongoing International Monetary Fund (IMF)/ World Bank Annual Meetings in Washington DC.

She, however, said in doing this, the central bank wants to ensure that it does not stifle innovation in the segment of the market.

She pointed out that a lot of disruptions from the fintech has been from the payment space, stressing the need for increased supervision by the regulator.

“The way fintechs are disrupting the Nigerian financial space, a lot of it has come from the payment space. So, you see them more active in the space for receipts where they are already getting licences from us.

“We’ve seen disruptions in the savings space and disruptions in the micro-lending space.

“So, these are not organisations that the CBN is not aware of. But broadly speaking, our focus has been to identify these organisations.

“That is why we are trying to finalise the incubation of some of these companies. So, there are those we need to identify and watch what they are doing and there are those we need to refine our regulatory framework for; because right now, it is skewed to banks and the payment service companies.”

Continuing, she said: “We are also looking at moving from regulation by identification, to more around regulating their activity.

“So if you are not a bank, you cannot get a banking license, but if you operate as a bank then we have to regulate what you do. We are looking at ensuring professionalism as well as in what we do in terms of regulation.

“We don’t want to stifle innovation, so we want more companies to come up and assist, because fintechs do a lot in furthering the financial inclusion objectives of the central bank.

“The central bank is working very hard in that respect and we are open to all organisations that are willing to come on board.”

According to her, cyber-security should not be an IT nor Chief Information Officers alone, but should be a business risk as well as regulatory issue.

Aishah, noted that because cybersecurity has the potential to disrupt IT operations as well as the financial sector and its ability to disrupt the mandate that central banks globally have for we have as for financial stability, it is important that central banks focus on resilience.

We had some of these guidelines and frameworks in place, it’s about strengthening them and identifying where you need to improve layout regulations so that they are fit for purpose.

Furthermore, the CBN Deputy Governor explained that the culture of disclosure starts with ensuring that there is adequate information sharing and collaboration among stakeholders, saying, “that is where it should start from.”

According to her, the central bank has created a framework or platform where the chief information security officers as a body, would have the opportunity to share information.

There has been a surge in fintech companies in the country. These firms which have continued to encroach in commercial banks’ businesses have been largely seen as threats to the profitability of financial institutions.

For instance, a report had shown that some fintech firms have started targeting the deposit and loans segments of traditional banks, with a view to taking part of the market share of the financial institutions.

The CBN had urged fintechs to ensure that they adhere to policy framework and standards that guide their operations.

The Director, Payment Systems Management Department, CBN, Mr. Samuel Okojere, had explained that fintechs were introduced into payment system with the aim of deepening financial inclusion in Nigeria.