Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), says financial technology (fintech) companies are disrupting the banking sector.
Emefiele said this on Tuesday at the International Association of Deposit Insurers (IADI) Africa Regional Committee (ARC) technical assistance workshop in Abuja, according to ThisDay.
The workshop themed ‘Normality in Turbulent Periods: The Stabilising Role of Deposit Insurance’ was organised by the IADI-ARC and hosted by the Nigeria Deposit Insurance Corporation (NDIC).
The event focused on the challenges of the financial sector regulators, including the CBN and the Nigeria Deposits Insurance Corporation (NDIC).
According to Emefiele, the rapid evolution of fintech companies has continued to alter the financial landscape globally.
He described the developments as “very disturbing”, adding that it has continued to disrupt traditional ways of offering financial services in the banking landscape.
Emefiele further said there is an urgent need for the banking industry regulators to guard their loins, “ensure that we can put in place strong regulatory framework and practices that should help nip in the bud, the unfortunate incident that may happen as we try to allow the growth of fintechs in Nigeria”.
The CBN governor, however, said interested fintechs can become banks by depositing N25 billion.
“Fintechs who want to be deposit-taking institutions should come forward and become a bank, bring N25 billion and be a bank,” he said.
Speaking further on the financial crisis, Emefiele said early detection of problems in banks, timely intervention, contingency planning, crisis preparedness and management were not a particular agency’s affair but required strong and effective collaboration among the major stakeholders within a nation’s financial services industry and the government.
“Our deposit insurance system (DIS), as a component of the financial safety-net arrangement, is the risk-minimiser model and has been very effective in the discharge of its mandate. The CBN and NDIC represent key components of Nigeria’s financial safety-net arrangement,” Emefiele added.
“That partly explains why we have been able to successfully resolve the series of financial crises that confronted us with satisfying results.
“It is instructive to mention that the CBN and NDIC have been able to deal with the emerging crisis in the nation’s banking system. The 2009 banking crisis, 2004 banking consolidation exercise and their subsequent resolutions, provided a reference point of the benefit for effective collaboration between the central bank and deposit insurer.”
Emefiele urged the IADI-ARC to increase its advocacy by reaching out to many countries in Africa to join the league of countries with DIS, adding that this would go a long way in strengthening the regional and continental financial systems for the benefit of all.