
Collaboration between banks and Fintech companies to drive real sector growth is key if the current administration is to achieve its vision of a $1 trillion economy, the Nigeria Deposit Insurance Corporation (NDIC) and financial experts have said.
Delivering a keynote address at the 2024 annual conference of the Finance Correspondents Association of Nigeria (FICAN) in Lagos over the weekend with the theme, “Nigeria’s Journey Towards $1 trillion Economy: Impact of Banks’ Re-capitalisation, Opportunities for Fintechs and Real Sector”, the Managing Director/Chief Executive, NDIC, Mr. Bello Hassan, stated that the current recapitalization initiative of the Central Bank of Nigeria (CBN) must be effectively implemented.
According to him, this is necessary towards enhancing the resilience, solvency and capacity of Nigerian banks to absorb shocks and continue to support economic development of the nation by efficiently performing their function as the fulcrum of financial intermediation.
He noted the role of strong and well capitalized banks in supporting the current administration’s bold vision of growing Nigeria’s economy to a $1 trillion must be appreciated by the relevant players in the financial sector.
“The opportunities and potentials for growth of the real sector depend, among others, on the availability and affordability of financing the economy. To achieve the desired level of financing required by the real sector, the window offered by banks in partnership with Fintechs, must be adequately harnessed,” he said.
He, however, emphasised the need for supervisors to understand the interconnection among the various financial services providers and how their policies and actions can affect the efficiency and optimality of the overall financial system.
He noted that many Nigerian banks have focused almost exclusively on large corporations, underserving small and medium enterprises as well as the financially excluded active poor unlike the Fintechs that have the potential of closing this gap through deployment of innovative financial services, using new technology and reduction of bottlenecks associated with traditional financial institutions.
“Notwithstanding the opportunities for growth and the benefit that the system stands to gain through the exploration of Fintechs in the financial services ecosystem, we must, as stakeholders, be conscious of the additional risks and complexities that the system may be further exposed, particularly in the area of privacy, personal information, customer protection, transparency, and cyber-security.
“This no doubt, has made regulatory oversight increasingly more complex. Financial regulators must evaluate existing rules and consider adoption of new regulations to better address the opportunities and challenges presented by these new technologies,” Hassan said.