Fintechs gain more grounds as CBN tightens regulation

The determination to serve the under-served majority in the Nigerian financial sector has brought more financial technology firms into limelight.

But the operators have come to face new challenges of compliance with Central Bank of Nigeria’s (CBN) operational guidelines for banks and other financial institutions, writes COLLINS NWEZE

Banking in Nigeria remains an attractive sector, with over N3.7 trillion in value addition to customers.

McKinsey & Company, a global management firm, report says despite high levels of competition, the majority of consumers remain underserved.

Lack of access to services, especially in rural areas, inaffordability, and poor user experience contribute to the frustration consumers experience across the customer spectrum.

This has created an opening that fintechs have been quick to take advantage of, with many stepping up to develop enhanced propositions across the value chain to address pain points in affordable payments, quick loans, and flexible savings and investments, among others.

At the same time, a youthful population, increasing smartphone penetration, and a focused regulatory drive to increase financial inclusion and cashless payments, are combining to create the perfect recipe for a thriving fintech sector.

Nigeria is home to over 200 fintech standalone companies, plus many fintech solutions offered by banks and mobile network operators as part of their product portfolio.

Between 2014 and 2019, Nigeria’s bustling fintech scene raised more than $600 million in funding, attracting 25 per cent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone—second only to Kenya, which attracted $149 million.

The Central Bank of Nigeria (CBN) has, on the need to boost financial sector security, put the Fintechs under regulatory scrutiny.

In many cases, apex bank had, through court order, froze the accounts of some fintechs allegedly involved in fraudulent financial activities. The move were part of the tightened regulatory surveillance to put the operators under check.