President of the Africa Fintech Network (AFN), Dr. Segun Aina, has attributed some of the regulatory challenges facing fintechs in Nigeria to the ever-changing nature of their technology-driven business models.
Naijaonpoint recalls that the CBN recently directed fintechs including OPay, Palmpay, Moniepoint, and Kuda Bank, to stop onboarding new customers because it suspected criminal elements were using their platforms to manoeuvre foreign exchange through crypto trading.
During an interview with Naijaonpoint regarding the CBN’s crackdown on fintechs, Aina remarked on the global difficulty governments and regulators encounter in keeping pace with technology’s rapid advancements, noting its impact on regulatory efforts.
While acknowledging that regulations may pose initial obstacles for fintechs, he cautioned against policies that could hinder innovation, highlighting their long-term benefits for both fintech startups and the broader financial system.
“One of the fastest and most dynamic sectors today is technology because it continues to change. So, the regulators and governments have to struggle to cope with how to regulate fintech because when you say innovation, these are things that did not exist before.
“Regulation may create some encumbrances for those who are in the business, but eventually it’s going to benefit the system because it will make everyone better at the business.
“What is important is that the policies must be friendly, must recognize that there is a need to innovate, and the policymakers must make sure that they carry along all the stakeholders so that they don’t just come up with a policy that will stifle innovation because that is worse,” the AFN president stated.
Aina highlighted challenges faced by fintechs due to corporate governance deficiencies, especially as most are small businesses lacking structures comparable to commercial banks.
However, he expressed optimism that as fintechs mature, they will establish proper governance.
He noted the progress of Nigerian fintech expanding to other markets with improved governance, emphasizing that corporate governance has become a central concern for fintech stakeholders in Nigeria and is expected to drive the country’s next phase of fintech growth.