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Adoption of US’s National Bank Charter to Slow Technology Growth in Financial Services

Abiola Olajide, Co-founder, Kiakia

Olajide Abiola, the co-founder of Kiakia has said that the adoption of US’s strategy of National Bank charter to online lenders will slow down the development of technology-driven financial services in Nigeria.

Abiola described USA’s strategy, which allows online credit companies and paperless lenders to get federal charters to do business nation-wide, as immature for the Nigerian market.

He opined that adopting and implementing such a charter will be overkill for a sector that is still in its incubation in Nigeria. “Digital literacy and adoption of technology adoption is still low,” he said.

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While maintaining that once the country is acquire critical mass of the adult population into the banked and digital bracket, the country can then consider similar strategy.

The Fintech expert, however, urged the Central Bank of Nigeria [CBN] to track trends, patterns, behaviour and impacts of numerous digital activities in the Fintech space.

Abiola stated that the CBN must cater to the activities of non-deposit lenders as the Central Bank of Ghana did.

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“Things can still be done in parallel because some companies just want to lend and are not interested in receiving deposits from the banking public.

“In a situation where depositor’s funds are not involved, there should be limited regulation. The focus and priority of regulation will be to ensure that consumers are not exploited and abused.

“State governments need to develop comprehensive and well-functioning regulatory system to manage micro-lenders as against their current cavalier disposition”, he said.

Kiakia boss implored government to be actively involved in the regulatory framework in order to sanitise the system for lending in relations to non-deposit lending.

“Regulation of lending activities requires decentralization and I am glad the constitution of the Federal Republic of Nigeria enshrines that.”

He pointed out that deposit related financial services that involve credit services are solely regulated by the CBN and insured by the NDIC, an initiative that only serve to protect depositor’s fund.