CBN mulls strict regulation for FinTech operations

Simeon Ebulu, Nduka Chiejina and Collins Nweze, Washington D.CThe Central Bank of Nigeria (CBN) said it has taken steps to increase the regulation of Financial Technology (FinTech) companies.The Deputy Governor, Financial System Stability, CBN, Mrs. Aishah Ahmad, disclosed this at the weekend, during a session on: Cybersecurity Exercises: Experience from Sub-Saharan Africa, at the ongoing IMF)/World Bank Meetings in Washington DC.According to her, 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.She said: Weve 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. 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 dont 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.She argued that cyber-security should be a regulatory issue because it has the potential to disrupt information technology (IT) operations as well as the financial sector, adding that it also has the ability to disrupt the mandate that central banks globally have for financial stability. To this extent, she said it is important that central banks focus on resilience.We had some of these guidelines and frameworks in place, its about strengthening them and identifying where you need to improve layout regulations so that they are fit for purpose.The culture of disclosure starts with ensuring that there is adequate information sharing and collaboration among stakeholders. That is where it should start from. So we have created a framework or platform where the chief information security officers as a body have an opportunity to share some of these incidences first of all and we will then agree going forward because a lot of these incidences are attempts and of course, we dont want a successful attempt, Mrs Ahmad said.
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