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Fintechs Are Disruptive – CBN Governor

Central Bank of Nigeria Governor, Godwin Emefiele, has accused financial technology (fintech) companies are disrupting the banking sector in Nigeria.

The CBN governor disclosed this on at the International Association of Deposit Insurers, IADI, Africa Regional Committee, ARC, technical assistance workshop in Abuja on Tuesday.  

The conference was put together by the IADI-ARC and hosted by the Nigeria Deposit Insurance Corporation, NDIC.

The event-themed ‘Normality in Turbulent Periods: The Stabilising Role of Deposit Insurance’ focused on the challenges of the financial sector regulators, including the CBN and the Nigeria Deposits Insurance Corporation (NDIC).

CBN

Speaking at the event, Emefiele the rise in the number of fintech companies has provided new global dynamics to the financial sector.  

Emefiele described the development as “very disturbing”, noting that it has continued to disrupt traditional ways of offering financial services in the banking landscape.

He expressed an urgent need for regulators to “ensure that we can put in place strong regulatory framework and practices that should help nip in the bud, the unfortunate incident that may happen as we try to allow the growth of fintech in Nigeria”.

According to the CBN governor, fintechs have the opportunity to become banks by depositing N25 billion.

He said, “Fintechs who want to be deposit-taking institutions should come forward and become a bank, bring N25 billion and be a bank.”

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He clamored for collaboration among key stakeholders within the financial sector to detect problems early, intervene early and effectively prepare and manage crises.  

The CBN governor added, “Our deposit insurance system (DIS), as a component of the financial safety-net arrangement, is the risk-minimiser model and has been very effective in the discharge of its mandate. The CBN and NDIC represent key components of Nigeria’s financial safety-net arrangement.

“That partly explains why we have been able to successfully resolve the series of financial crises that confronted us with satisfying results.

“It is instructive to mention that the CBN and NDIC have been able to deal with the emerging crisis in the nation’s banking system. The 2009 banking crisis, 2004 banking consolidation exercise and their subsequent resolutions, provided a reference point of the benefit for effective collaboration between the central bank and deposit insurer.”

Source: Cable

Obiajulu Joel Nwolu

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