FINTECH Firms can’t be Licensed Now- NDIC
Even though there are inherent benefits of Fintech technology in the nation’s financial system, license may not be given to FINTECH operations now by the regulatory authorities until studies are concluded.
Dr Ibrahim Alley, of the Research Department of NDIC, stated this at the just concluded Annual General Meeting and Forum of Finance Correspondents Association of Nigeria (FICAN) held in Abuja.
In his paper presentation titled: ‘Fintech & Disruptions in Deposit Insurance Regulation’, Dr Alley said lack of consumer understanding, mis-selling of products and services, Financial exclusion, Data privacy, security and protection and Reduced competition are some of the risks posed to consumers of fintech technology.
He also said that risks posed to Financial System Stability include the Systemic Risk of Decentralization, regulatory Opacity, and reputation and Cooperative Behavior, adding that full disclosure of information about any financial technology (fintech) operator is required before licensing it.
Dr alley noted that concealment of information about their operations had slowed down the pace of their licensing in the country, stressing that fintech, which was still relatively new, had broad capacity which could pose some threats.
According to him, the use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the public.
Alley said that the financial regulators in Nigeria, the CBN and NDIC, needed to effectively understand the space before issuing licenses.
“As an operator, you cannot say that you developed a product today and next week, you just put it out there and you want to start collecting people’s deposit or data and then, we just allow you just like that.
“Fintech operators still complain that they see regulation as a hindrance. They still say that CBN, NDIC are slow. If you think about it, we have a reason. “If you develop something today, it needs to be tested. We need to test it a little, we also need to know you. When you hear operators say that regulators are slow, perhaps, because there are processes to follow. “Also, there is a need to slow down to understand what is going on because there are so many new things.
“Part of the problem of Fintech with regulations is that when you are trying to understand what they are doing; they do not want to really uncover it or explain to you. “You cannot be licensed without being understood’, he said
He listed some concerns of regulators for the technology to include financial stability, integrity of data in banking, appropriate consumer protection with financial literacy and digital Ponzi scheme. Highlighting the advantages of Fintech, Alley said it could help small and medium enterprises to get access to credits, enhance competitions and increase resilience of the financial sector, if the right things were done.
On the future of banking, he advised banks to get smarter with each interaction with customers to meet international best practices, adding that technology had given rise to digital banks across the country.