Supervisors must 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, says Nigeria Deposit Insurance Corporation (NDIC).
The corporation further disclosed that to achieve sustainable and inclusive growth, policy makers must create an enabling environment that support innovation, financial inclusion and growth while simultaneously protecting the markets, consumers, and investors.
The Managing Director NDIC Hello Hassan made the charge at the annual workshop of Finance Correspondents Association of Nigeria (FICAN) held recently in Lagos.
According to Hassan, within the commercial, merchant and non-interest banking business, many banks have focused almost exclusively on large corporations, underserving small and medium enterprises as well as the financially excluded active poor.
ButFintechs 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.
“With increasing use of smartphones and internet penetration, many unserved and underserved customers, can gain access to the formal financial services.
“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 however, 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, “ he said adding that this no doubt has made regulatory oversight increasingly more complex.
Hassan noted further that financial regulators must evaluate existing rules and consider adoption of new regulations to better address the opportunities and challenges presented by these new technologies.
His words, “With regard to timely reimbursement of depositors in the event of license revocation, the Corporation has developed and implemented fabulous initiatives in response to historical depositor apathy and delay associated with the physical depositor verification process. NDIC has therefore, developed a depositor tracing framework targeted at tracing depositors through various approaches and ensure that, such depositors are duly reimbursed their deposits trapped in a failed bank.
“We have equally collaborated and leveraged on the NIBSS BVN database to locate depositors’ alternate account in other banks to seamlessly reimburse them without the need to come for physical verification.”
According to him, relevant players in the financial sector must appreciate the role of strong and well-capitalized banks in supporting the current administration’s bold vision of growing Nigeria’s economy to $1 trillion.
“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 stated that the CBN and NDIC have collectively through their respective mandates repositioned the banking industry to better serve its intermediation role for the benefits of real sector and in fact all other sectors of the economy.
He said the CBN foreign exchange rate unification and banks recapitalization are some of the key initiatives necessary for propelling national economic growth.
Hassan highlighted that the foreign exchange rate unification policy has the potential for promoting foreign direct investment, foreign portfolio inflows, increased investor confidence, reduction of budget deficit, and improved sovereign credit ratings.
“The objective of the CBN and NDIC is to promote a safe, sound and stable banking system that is capable of providing the required financing to our productive sectors of the economy. This is crucial in Nigeria’s journey towards the $1 trillion economy that we all aspire to attain,” he added.
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