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CBN to Unveil 4-Tiered Licencing Model For Fintechs

Happy Money

The Central Bank of Nigeria (CBN) is mulling a four-tiered licencing model for financial technology (Fintech) companies in Nigeria in other to advance digital financial services.

The CBN Director Payments Systems Management Department, Mr. Musa Jimoh, disclosed this at the First Bank Fintech Summit 4.0 virtual forum with the theme: ‘How Blockchain and Artificial Intelligence will Disrupt FinTech in Nigeria’.

He said the apex bank is working on breaking down the licences for operators in the financial technology sector to allow small players in the industry access into the market as it works on harmonizing data in the financial sector.

“The new licensing model that would enable the small companies to come into the forum without going through those stringent conditions that the regulars would impose on the big companies,” he said.

Jimoh noted that with the rapidity of advancement in blockchain technology and other payment system disruptions the apex bank is working on revising its 10-year payment systems strategy to five years. According to him because the ability of changes in technology is so high “we cannot wait 10 years to begin to review our strategies again.”

Thus, as against the payment vision which is to extend to 2030 as a 10-year vision, he said “what we are proposing is to have a 5-year strategy which would then call PSV2025. And once we get approval for this, we would be looking at initiatives for the next five years.

“Some of the initiatives we have put on the table on some of the things we are trying to implement to deepen acceptance of payment systems and open the market for innovators and small businesses to enter the terrain.

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“First is the regulatory sandbox, which is already in the public which we shared a draft framework for them to comment and then get back to us. We have gotten a lot of feedback and I am happy enough to announce that we are working together with the financial conduct authority in the United Kingdom in developing this regulatory sandbox and eventually we would customise it to our environment to ensure that it fits in to our own ecosystem.

“Secondly, the open banking regime which we have started working on in order to allow the entire ecosystem to work symbiotically. We want a situation where there would be no exclusivity on account data being held by banks again. Banks should be able to open up their accounts database and let fintech companies and other small companies add value added services on account information they hold.

“So, we need regulation that basically makes the market conduct very resilient and more responsible. We have also done a lot of initiatives that are contactless as COVID-19 has exposed some of the weaknesses in our payment structures. There are other initiatives that are coming up but we need to focus on these ones because we know they would basically drive the ecosystem into the future.”

On artificial intelligence and big data, he said the CBN is trying to harmonise data and provide a “database where people can slice dice and trend what the future of payment holds in terms of the activities that have happened within the payment infrastructure.”

Speaking on what is being done to curb the use bitcoin technology for fraud, the Executive director, technology and services at Nigeria Inter Bank Settlement Sysytem (NIBSS), Aminu Maina, said “it is an area that is being actively look at from a regulatory perspective and the CBN is also asking for our opinion in terms of industry infrastructure but rest assures we at NIBSS are here to ensure that the industry is secure in terms of where we stand at the center of interconnection and the CBN is also here to ensure that the financial industry upholds its integrity.”

On his part, the Managing Director of First Bank, Dr Adesola Adeduntan noted that the sudden emergence of covid-19 had further emphasized the importance of the fintech industry to the payment system. “There is no doubt that the fintech industry is the fastest growing sector within the Nigerian economy which is run by a sizeable number of young entrepreneurs.

“Indeed the covid -19 has become a catalyst for the accelerated innovation that we greatly desire. The business world and the workplace have changed dramatically. However at First Bank we have seen the covid-19 era from a positive lens as a period new opportunities.

“Therefore the era calls for a deliberate approach in reviewing and identifying new opportunities. Incidentally fintech is part of the new opportunities and that is why we have for this edition elected to concentrate on how blockchain and artificial intelligence will disrupt the sector in Nigeria.”