The Nigeria Deposit Insurance Corporation (NDIC) yesterday said it will adopt financial technology (fintech) solutions and tools to modernize its data collection and analysis processes amidst emerging safety issues surrounding application of technology in the nation’s financial system.
Noting that there is increasing evidence that Fintech innovations have many advantages for businesses and customers, including enhancing market competition and financial inclusion, Umaru said that NDIC has some concerns about fintechs.
He however added that in spite of these concerns the Corporation will leverage on fintech tools to modernise its data collection and analysis.
He said: “Financial system instability increases the volatility of asset prices and investor behaviour, leading to deteriorating credit conditions, increased costs to firms and households and potentially the collapse of the payment system. There is increasing evidence that Fintech innovations have many advantages for businesses and customers. The World Economic Forum, 2017, suggests Fintech is “disruptive”, “revolutionary”, and armed with “digital weapons”, that will “tear down” traditional financial institutions.”
According to him, though, “Fintech will enhance market competition and financial inclusion, however, the increasing sophistication and proliferation of technology in banking operations also ushered in unintended consequences like operational and legal risks, as well as the security of consumer personal data. The recent experiences of technology giants selling consumer data without consent or authority is a cause for concern.”
Consequently, he stated: “In Nigeria for instance, the Central Bank recently released a draft framework for regulatory sandbox operations to encourage innovation, especially for Startups. The NDIC equally established an ‘Innovation and Fintech Unit’ to drive its agenda for emerging technology and provide solutions to improve the safety of depositors and the banking system.”