The Nigeria Deposit Insurance Corporation (NDIC) on Wednesday raised concerns on how it could identify and insure non-bank deposit taking institutions licenced by the Central Bank of Nigeria (CBN) and other Agencies like Securities and Exchange Commission (SEC).
Umaru Ibrahim, managing director/CEO disclosed this at the ongoing 2020 workshop for business editors and financial Correspondents organized by NDIC in Kaduna State.
“Currently, there is an ongoing engagement with the relevant regulatory agencies on how to actualise that within the limits of legal provision,” Ibrahim said.
The second challenge he said was how to tap into the potentials of Fintechs to effectively execute its business processes easily, speedily and reliably.
According to McKinsey & Company, Nigeria is now home to over 200 fintech standalone companies, plus a number of fintech solutions offered by banks and mobile network operators as part of their product portfolio. Between 2014 and 2019, Nigerias bustling fintech scene raised more than $600 million in funding, attracting 25 percent ($122 million) of the $491.6 million raised by African tech startups in 2019 alonesecond only to Kenya, which attracted $149 million.
“From the foregoing, it becomes evident that the theme of this conference is informed by emerging developments in the Fintech space and the expected long-term effects of the pandemic on the financial system, which will largely be determined by our actions in promoting innovation while also strengthening bank stability,” he said.
Nigeria’s Central Bank recently released a draft framework for regulatory sandbox operations to encourage innovation, especially for Startups. The NDIC equally established an Innovation and Fintech Unit to drive its agenda for emerging technology and provide solutions to improve the safety of depositors and the banking system.
Ibrahim said the impact of the COVID-19 pandemic and the resultant disruptions to social and economic activities had negative consequences on all nations across the world. The threat of recession, increased national debt, increase in non-performing loans and potential financial crisis has put pressure on regulators to reassess their supervisory activities to strengthen their capabilities to address these challenges and forestall financial crisis.
According to him, FinTech is simply the common term used to describe the technology (internet, mobile devices, software app, cloud services and many more) that are used in delivering important financial services that were exclusive to traditional financial institutions. Despite promising innovation and economic growth through disruption of traditional finance, Fintech disruptive financial services such as chip-based debit/credit cards, mobile and web-based payments cloud computing also poses a major challenge to the regulatory paradigm.