Financial services regulators have their work cut out, amid heightened cybercrimes and credit risks reinforced by the Coronavirus (COVID-19) pandemic, thereby triggering fears of solvency in Nigeria’s banking sector.
Such fears notwithstanding, the regulators – the Nigerian Deposit Insurance Corporation (NDIC), and the Central Bank of Nigeria (CBN), have reassured stakeholders that there is no cause for alarm, as they are constantly devising strategies to remain ahead of fraudsters and cybercriminals.
Giving the assurance at a just-concluded workshop for journalists, which ended the weekend in Kaduna, the Director, Bank Examination Department, NDIC, Dr. O. O. Babatolu, also said the regulators Continue to build resilience in the financial system by implementing proactive policies.
Babatolu, who spoke on, “Risk Management Strategies for the Banking Industry to Deal With a Pandemic or Crisis,” listed other measures taken to foster financial system stability.
They include to ensure enhancement to bank’s risk management and governance, ensure proactive crisis management and effective resolution, facilitate orderly evolution of market infrastructure for liquidity buffers and non-performing loan (NPL) resolution, and ensure compliance with rules and regulation; including the integrity of reporting
However, the regulators agreed that the new normal brought about by the COVID-19 has impacted consumer experience, trust, and confidence in the banking sector, as banks scaled down operations in compliance to safety guidelines and protocols, leading to services and customer traffic diverted to alternative e-channels (ATM, internet, POS/Web, etc) and an attendant spike in frauds and cyber-attacks/threats.
In regards to consumer protection against such threats, the CBN stressed the need for more investment in research to sustain innovation, to address the associated consumer risks, and enhance the regulatory process.
In a paper on, COVID 19 Pandemic and the Challenges of Consumer Protection in the Financial System, the Director, Consumer Protection Department, CBN, Haruna Mustapha, sought concerted and coordinated efforts amongst policymakers, regulators, financial services providers, and other stakeholders to protect consumer interest.
He identified a number of challenges impeding consumer protection such as infrastructure deficit (low internet penetration, power, security, etc.); understanding consumer behaviour; fraud and cybersecurity; low financial and digital literacy, and the need for a robust legal framework.
He, therefore, assured that the CBN will continue to provide a suite of regulatory interventions to ease its impact on banking and financial services delivery; issuance of fraud and cybersecurity advisories to alert and protect consumers from the activities of fraudsters, to mitigate the risks associated with the use of financial products or services by the consumer.
He also stressed the need “to ensure that authorities and researchers have the proper data to monitor and study FinTech and big tech credit platforms.”
He noted that “As regulatory oversight increases, a thorough understanding of financial services in the Nigerian context, particularly in compliance, is becoming a prerequisite for success.”
He added that “Most fintech have a technology background but limited experience in financial services and will need to ensure that they develop or acquire this competency.”
