Yemi Cardoso, Nigeria’s Central Bank governor has highlighted the need for Non-Bank Financial Institutions such as Fintechs to follow “global best practices in their operations.
The CBN boss made the remark on Monday at the opening of the 10th meeting of the College of Supervisors for Non-Bank Financial Institutions, CSNBFI, of WAMZ in Abuja, the nation’s capital.
Some fintechs firms operating in Nigeria include, Kuda, Piggy Vest, Habari, Flutterwave, Paga, Palmpay, Opay, and Paystack, amongst others.
Represented by CBN acting Director, Other Financial Institutions Department, OFID, Abayomi Orogundade, Cardoso said regulatory authorities must ensure that fintechs regulations are in line with global standards.
Cardoso who said NBFIs of the West African Monetary Zone WAMZ present a unique opportunity to quicken regional integration and shared economic prosperity, added they have become so important to the economy in terms of the services that they provide, that their role cannot be over-emphasized.
He however stated that the volume of transactions carried out by the NBFIs posed major financial system stability threats, in spite of this, Cardoso said NBFIs have crucial roles to play in ensuring both financial stability and the specialised financial intermediation they were licensed to play.
Appluading the milestones recorded by NBFIs so far, the CBN governor said: “We must continue to push forward the agenda of strengthening the anti-money laundering practices; deepening supervisory capacity on cybersecurity and fintech regulation; and the implementation of risk based supervisory approach.
Apart from online loans made available to customers, Cardoso stated that fintech firms that “offer applications, software, and other technologies to streamline mobile and online banking.”
“We reiterate the importance of monitoring trends, risks and innovations of NBFIs/OFIs, as their increasing transaction volumes pose major financial system stability risk.
“Fintech loans are one of the most commonly reported innovations. While overall this may appear small in relation to the size of credit by DMBs, some jurisdictions, globally, have noted a growing trend in the volume of these loans.”
“In many cases, fintech credit is provided via electronic platforms that connect lenders to borrowers – in which case the platform takes the role of a financial auxiliary.
“In some cases, however, loans are taken on the balance sheet of these platforms (even if it is short-term), in which case the platforms are akin to new types of financial intermediaries.
“These entities are typically fintech firms that offer applications, software, and other technologies to streamline mobile and online banking,” the CBN governor stated.
