Roadmap for Financial Aggregation in Nigeria: The Fintech, Banks and Regulators Guide

Description

ABSTRACT

Roadmap for Financial Aggregation in Nigeria: The Fintech, Banks and Regulators Guide

Ugo Nwaokike*

The Nigerian Fintech’s space is developing. Traditional financial institutions particularly the banking sector, are redefining their financial offerings by ‘finnovating’ and blurring the lines that the average Fintech start-ups had initially created through their disruptive technology. However, in order to facilitate a collaborative financial ecosystem and prevent anti-competitive hassle between the various market participants in the Financial Service (FS) industry, there is a need for the relevant regulatory authorities and government to create a regulatory architecture that would redefine the role of the incumbents and start-ups (entrant) in the Fintech ecosystem. This recommended roadmap ‘is divided into five (5) sections. The first section is a brief introduction of the impact of innovation in the financial service (FS) industry with emphasis on collaboration among the industry participants; the second section provides a pest analysis of Fintech’s emergence in Nigeria; while the third and fourth sections highlight the challenges in the industry and existing partnership among market participants. The last part is divided into regulatory and business suggestions for the FS industry and a concluding clarion call for proactive government legislation.

Keywords: Fintech, Technology, Banks, Financial inclusion

INTRODUCTION
The advent of technology in our daily activities has provided varying adoption models and peculiarities in its engagement by various users. Laudably this innovative technology has been ushered into the Financial Service (FS) sector commonly known as Financial Technology (Fintech), and it is here to stay. The Fintech buzz has been ongoing, and various jurisdictions have adopted or are adopting and testing multiple regulatory and adaptive business models in ensuring a sustainable environment for their Fintech boom and the ultimate growth of the FS industry. Interestingly, the Central Bank of Nigeria (CBN) on October 5 and 15 2018 released an Exposure Drafts for Guideline for Payment Service Banks (PSB) and New CBN Licencing Regime (Licensing Tiering) for Payments System Providers respectively. While the latter initially₁ excluded the Fintechs, the former only detailed the licencing and capital requirements for some Fintech sectors leaving out other emerging trends like platform lending etc. However, rather than join issues on the efficacy of the drafts mentioned above or other existing piecemeal regulations issued by CBN with touch points on Fintech, the pertinent concern is the need for a holistic framework in the FS at the wake of its technological disruption.

* LL.B, BL. Associate at Punuka Attorneys & Solicitors, Lagos, Nigeria.

1.  The revised and issued Guidelines was made in October 26, 2018 after the CBN had received various comments from stakeholders with major concerns on the capital requirement placed on the PSB accessed 3 November 2018.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.10 NO.1