Nigeria’s fintech industry is evenly divided over the country’s regulatory climate, with half of operators describing it as supportive of innovation and the other half viewing it as a constraint, a new survey by the Central Bank of Nigeria has shown.

The finding is contained in the CBN Fintech Report 2025, released on Monday, drawing from a nationwide ecosystem survey, a closed-door stakeholder workshop held in June 2025, and the October 2025 CBN Fintech Roundtable.

According to the apex bank, the split reflects persistent concerns around licensing delays, unclear guidance, and uneven enforcement across regulatory agencies, despite increased engagement between regulators and fintech operators.

The report stated, “Exactly half of respondents view the regulatory environment as enabling, while the other 50 per cent find it restrictive. This divergence stems from perceived delays in licensing, lack of clarity in guidance, and inconsistent application of rules.”

Beyond perception, regulatory processes were found to be slowing innovation. About 62.5 per cent of surveyed firms said approval timelines materially delay product launches, while more than one-third reported that bringing a new product to market takes over 12 months, largely due to compliance bottlenecks.

Compliance costs emerged as an even deeper strain. Roughly 87.5 per cent of fintechs said spending on regulatory and risk-management requirements significantly limits their capacity to innovate, particularly costs linked to anti-money laundering controls, cybersecurity, and fraud prevention.

While firms acknowledged the necessity of these safeguards, many complained that fragmented supervision and duplicative reporting inflate costs, especially for smaller or fast-growing companies.

Despite the frictions, the report found a strong appetite for deeper, more predictable engagement with regulators rather than deregulation.

About 75 per cent of respondents called for regular, structured engagement forums, while all surveyed firms expressed willingness to collaborate through regulatory sandboxes, policy pilots, or working groups. The CBN said this points to a shift towards high-trust, institutionalised engagement models.

Regional expansion remains a major growth ambition, with about 62.5 per cent of firms already operating or planning to expand into other African markets.

However, respondents warned that fragmented licensing regimes across countries raise costs and slow expansion.

An equal share supported regulatory passporting, which would allow licences issued in Nigeria to be recognised in peer markets under agreed frameworks. Ghana, Kenya, South Africa, Uganda, and Senegal were identified as potential pilot jurisdictions.

While fintechs broadly praised Nigeria’s real-time payments infrastructure as one of Africa’s most advanced, they flagged gaps limiting scale and inclusion, including limited access to affordable digital identity verification, incomplete data-sharing systems, and uneven broadband penetration.

The report also cited the December “Detty December” period as a stress test, noting spikes in transaction failures and service disruptions during peak demand.

On cryptocurrency, operators acknowledged its potential for cheaper cross-border payments and inclusion but cautioned against blanket restrictions.

They called instead for risk-based regulation, clearer rules on permitted activities, and stronger international cooperation. Access to capital also remains challenging, with 37.5 per cent of respondents citing macroeconomic volatility, currency risk, and delays in foreign investment approvals.

In response, 87.5 per cent backed fintech-specific growth funds or credit-guarantee schemes, preferably through public-private partnerships.

The report further revealed that risk management concerns are shaping technology adoption across the sector. About 87.5 per cent of Nigerian fintechs now deploy artificial intelligence for fraud detection, making it the most common AI use case.

AI-powered chatbots are used by 62.5 per cent of firms for customer service, while 37.5 per cent apply AI to credit scoring, risk modelling, customer onboarding, and know-your-customer processes.

According to the CBN, this pattern reflects both the scale of fraud risks in Nigeria’s fast-growing digital finance ecosystem and the increasing reliance on data-driven tools as fintech services deepen across payments, lending, and remittances.

The apex bank warned that while Nigeria processed close to 11 billion real-time payment transactions in 2024, rapid digitisation has expanded the system’s risk surface.

Fraud, weak controls at some fast-scaling firms, and cross-border financial crime remain concerns, even as Nigeria has strengthened anti-money laundering supervision and exited the Financial Action Task Force grey list.

Despite these challenges, fintechs showed strong interest in responsible AI deployment. About 62.5 per cent said they are keen to participate in an AI-focused regulatory sandbox, while 75 per cent prioritised ethical and transparent use of AI in credit and risk decisions.

The CBN said the findings highlight both progress and unresolved tensions within Nigeria’s fintech ecosystem. In the foreword of the report, the Governor of the CBN, Olayemi Cardoso, said the CBN has witnessed “first-hand the transformative power of digital finance to broaden economic participation, create meaningful employment, and improve the lives of millions of Nigerians.”

He noted that fintech innovation must flourish “under prudent oversight,” stressing that while innovation is critical, “upholding the integrity of the financial system, maintaining strong governance, consumer protection, and risk management” remains essential.

Cardoso added that Nigeria’s goal is to “strike the right balance” by encouraging innovation that drives growth while ensuring stability and public confidence, positioning the country as a model for fintech in Africa and beyond.

In a statement issued by the CBN on Monday following the publication of the survey report, the apex bank noted that the report highlights Nigeria’s leadership in real-time payments and positions fintech innovation as “a complementary force within the financial system, expanding access, efficiency, and reach, while preserving stability and resilience.”

It added that the publication provides “practical policy directions to improve regulatory coordination, strengthen supervisory capability, and support responsible innovation,” and will serve as a shared reference point for stakeholders as Nigeria consolidates its place in the regional and global fintech landscape.