FinTech is simply the common term used to describe the technology (internet, mobile devices, software app, cloud services and many more) that are used in delivering important financial services that were exclusive to traditional financial institutions
The Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation, Umaru Ibrahim, At The Opening Ceremony Of The 2020 NDIC Editors Forum At The Providence Hotel By Mantis Hotel On Wednesday November 25, 2020 said the theme aptly captures the current concerns of all stakeholders within the local and global economic and financial landscape,
In his keynote address at the forum, Ibrahim said permit to me to recall that this Forum was introduced in 2012 as platform for engagement with senior media professionals. It is designed to rub minds on the implementation of the Deposit Insurance System (DIS) in Nigeria, particularly, the Corporation’s contributions to the nation’s financial system stability, the challenges being confronted in this regard and the ways forward.
At this juncture, he said, I would like to focus our attention on this year’s theme: “COVID-19 & FinTech Disruption: Opportunities & Challenges for Banking System Stability and Deposit Insurance”. In my mind, I believe the theme aptly captures the current concerns of all stakeholders within the local and global economic and financial landscape, he added. The theme was carefully chosen to critically analyse the risks, implications and opportunities posed by the Pandemic and FinTech on the Nigerian banking sector and the global financial system as a whole, he said.
“The impact of the COVID-19 pandemic and the resultant disruptions to social and economic activities had negative consequences on all nations across the world. The threat of recession, increased national debt, increase in non-performing loans and potential financial crisis has put pressure on regulators to reassess their supervisory activities to strengthen their capabilities to address these challenges and forestall financial crisis.
The managing director who was represented at the event by Bashir A. Nuhu, Director, Communication and Public Affairs Department of the Corporation noted that FinTech is simply the common term used to describe the technology (internet, mobile devices, software app, cloud services and many more) that are used in delivering important financial services that were exclusive to traditional financial institutions. According to him, despite promising innovation and economic growth through disruption of traditional finance, Fintech disruptive financial services such as chip-based debit/credit cards, mobile and web-based payments cloud computing also poses a major challenge to the regulatory paradigm.
“Managing the risks associated with emerging technology without stifling innovation has become a major theme amongst regulators and policy makers. In Nigeria for instance, he said the Central Bank recently released a draft framework for regulatory sandbox operations to encourage innovation, especially for Startups. 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 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.
Consequently, “we look forward to modernising our data collection and analysis through the use of Fintech solutions/tools (Regtech and SupTech) to handle the following business processes better than currently being done: Risk Based Supervision (RBS), Monitoring Compliance, Premium Administration, Early Warning Signals, Stress Testing, Analysis of insured institutions’ performance etc.
According to McKinsey & Company, Ibrahim said Nigeria is now home to over 200 fintech standalone companies, plus a number of 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 percent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone—second only to Kenya, which attracted $149 million.
The managing director noted that the issues confronting us today are indeed monumental and unprecedented but not insurmountable. The critical role of the media is central in shaping public perception and supporting financial stability through the effective reportage of the regulators’ activities, especially NDIC’s roles in protecting depositors and promoting safe and sound banking system.
“I strongly believe that we can continue to count on your support and collaboration in our quest to strengthen the safety, soundness and stability of our nation’s financial system.
The Captioned Photo: The Managing Director/Chief Executive, Nigeria Deposit Insurance Corporation, Umaru Ibrahim