Fintech has Revolutionized Nigeria’s Financial Industry – NDIC Official

By Tony Obiechina, Abuja

The introduction of the new Fintech paradigm viewed as displacing the old system has revolutionized the financial industry, an official of the Nigeria Deposit Insurance Corporation, NDIC, has observed.

Dr Ibrahim Alley of the Research Department of NDIC, made the observation while speaking at a Forum of the Finance Correspondents of Nigeria (FICAN) in Abuja.

He said, “even banks and financial institutions having accepted inevitability of Fintech disruption, have keyed into the new order serving customers better and entrenching their market niche”.

Said he, “just like regular financial institutions are regulated to protect the public from risks, so are the emerging Fintech operators. The approach and severity of regulatory stance correspond to the level of risks posed by Fintech operations to the public and financial stability.

“If Fintech operations would pose risks manageable within the regulatory and supervisory framework, it is allowed and embedded within the framework for effective risk management and financial system stability, else, the monetary and banking supervision authorities either disclaim it (in case of Nigeria and many other Sub-Sahara African countries like Ghana, Kenya) or ban it absolutely (Algeria, UAE) or implicitly (China, Lesotho).”

According to him, the risks of Fintech, included, lack of consumer understanding; Mis-selling of products and services; financial exclusion; data privacy, security and protection; and reduced competition.

On the emergence of the crypto currencies, the NDIC official however noted that Nigeria’s financial sector regulators are skeptical of the new trade and may not provide security for investors in the system.

He said that some jurisdictions had recognised crypto currencies because of the level of development of their economies but that Nigerian regulators did not want Nigerians to invest in schemes that they did not understand and not under the purvey of Nigerian regulatory authorities.

Dr Alley said, “just like regular financial institutions are regulated to protect the public from risks, so are the emerging Fintech operators. The approach and severity of regulatory stance correspond to the level of risks posed by Fintech operations to the public and financial stability.

“If Fintech operations would pose risks manageable within the regulatory and supervisory framework, it is allowed and embedded within the framework for effective risk management and financial system stability, else, the monetary and banking supervision authorities either disclaim it (in case of Nigeria and many other Sub-Sahara African countries like Ghana, Kenya) or ban it absolutely (Algeria, UAE) or implicitly (China, Lesotho).”

According to him, the risks of Fintech, he said included: lack of consumer understanding; Mis-selling of products and services; financial exclusion; data privacy, security and protection; and reduced competition.

Fintech stands for Financial Technologies. It refers to technological innovation in the financial sector, including anything and everything from mobile banking and peer-to-peer payments to distributed ledger technologies and digital currencies
They are firms/startups or products that are currently taking opportunities and leveraging tech to tackle financial problems in Nigerian society. They can be clearly divided into Payments, Asset/WealthTech, CreditTech, InsureTech, Crypto, Personal Finance, among others.

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