Regulation of FINTECH business- a feedback comment

Regulation of FINTECH business- a feedback comment

CBN actually has some circulars and policies meant to control FIN|TECH operations in their Guidelines.  The circulars or guidelines were referring to some businesses like service providers, payment companies, merchant and non merchant acquiring, payment service providers, QR code providers, USSD, Mobile money, social banking etc. Although it is true that the policies have not been updated and executed in a manner it will really control the FINTECH services as expected.

In application, CBN seem to expect Money deposit banks (MDB) and NIBBS to take ownership of risks being introduced by the FINTECHs because they cannot fully circle major transactions without a bank. This option being considered, the Banks and NIBBS should develop a risk strategy to cover products, operations and IT security of FINTECHs as part of the integrations or enrollment due diligence requirements.

Yes, location limitations for national, regional and state banking licenses have suffered setbacks and should be reviewed due to the digital banking invasions in the industry. However, the reality remains that Internet driven financial products or services are borderless and can be consumed anywhere. NCC seems to be facing the same challenge, where a sub-urban or a village licensed radio station shoots the texts, voice and video content of their broadcast across the internet through a URL and can be reached anywhere-far beyond the limitations spelt in the broadcast license.

In the meantime, instead of stifling the businesses of the FINTECHs, MDBs and NIBBS should increase their due diligence activities by working closely with the FINTECHs in the ways to identify, mitigate and monitor risk issues in their operations, products and  in the technology systems.