The Managing Director/Chief Executive of Deposit Insurance Corporation (NDIC), Umaru Ibrahim, has called for all stakeholders’ collaboration on managing financial system risks to avoid increases in the volatility of asset prices and investor behaviour that may lead to deteriorating credit conditions, increased costs to firms and households and, potentially, the collapse of the payment system in the nation’s economy.
Ibrahim, who also raised concern over ‘the recent experiences of technology giants selling consumer data without consent or authority”, said though there was increasing evidence that Fintech innovations had many advantages for businesses and customers, the World Economic Forum, 2017, suggests Fintech is “disruptive”, “revolutionary”, and armed with “digital weapons” that will “tear down” traditional financial institutions.
Speaking at the Kaduna Run of the 2020 NDIC Workshop for Business Editors, Finance Correspondents Association of Nigeria (FICAN) and other stakeholders under the theme, ‘COVID-19 & FinTech Disruption: Opportunities & Challenges for Banking System Stability and Deposit Insurance,’ Ibrahim said: “The increasing sophistication and proliferation of technology in banking operations also ushered in unintended consequences like operational and legal risks, as well as the security of consumer personal data” and that “managing the risks associated with emerging technology without stifling innovation has become a major theme amongst regulators and policy makers.
According to the NDIC boss, “In Nigeria, for instance, the Central Bank recently released a draft framework for regulatory sandbox operations to encourage innovation, especially for Start-ups.
“The NDIC equally established an ‘Innovation and Fintech Unit’ to drive its agenda for emerging technology and provide solutions to improve the safety of depositors and the banking system.”
He added: “There are two main concerns for the Corporation on Fintech: these are how to identify and insure non-bank deposit taking institutions licenced by the CBN and other agencies e.g. SEC. Currently, there is an ongoing engagement with the relevant regulatory agencies on how to actualise that within the limits of legal provision. The second is how to tap into the potentials of Fintechs to effectively execute its business processes easily, speedily and reliably.”
