CBN moves to tighten regulations on Fintech firms

The Central Bank of Nigeria (CBN) has taken steps to increase supervision and regulation of Financial Technology (FinTech) companies such as Renmoney, Piggyvest, Credit Direct, and organisations in this space.

Mrs Aishah Ahmad, Deputy Governor, CBN disclosed in a session on Cybersecurity Exercises: Experience from Sub-saharan Africa at the just concluded World Bank Meetings in Washington DC.

Mrs Ahmad stated that the CBN had been focused on identifying the Fintechs, which have created disruptions in the payment, savings and micro-lending space. According to Mrs Ahmad, the CBN is working hard on creating a regulatory framework around the operations of the Fintechs and increase supervision and regulation, ensuring that these organisations stick to the conditions of their license.

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 licenses from us.

We’ve seen disruptions in the savings space and disruptions in the micro-lending space. So, these are not organizations that the CBN is not aware of. But broadly speaking, our focus has been to identify these organizations.

“That is why we are trying to finalize 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. 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.”   –  Mrs Ahmad.

However, CBN stated it didn’t want to repress innovation within this space. The apex bank even encourages more organisations to come on board because FinTechs are doing a lot to further financial inclusion in the country.

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

MeanwhileAhmad also expressed concerns over cyber-security issues within the Fintech space as disruptions have the ability to disrupt the mandate Central Banks globally have for financial stability. She stated that cyber-security should be a regulatory issue and regulations in the area needs to be strengthened.

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.

 

 

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