Amidst the fintech boom in Nigeria and increasingly tight regulations on the industry, African technology giant, SystemSpecs, has called for a balance between innovation and regulation to ensure a healthy financial technology ecosystem that will benefit all stakeholders.
According to Ezinne Obikile, the Executive Director in charge of the payment business at SystemSpecs, who was a panelist at the recently held Businessday Future of Paytech Workshop, proper regulations should present opportunities for growth and innovation for both the regulators and regulated and should engender a growing and resilient financial system.
Speaking during a panel session at the event themed, ‘Stick and Carrot: Walking the Tight Rope between Regulation and Innovation,’ the fintech expert called for more interactions and collaborations between regulators and players in the industry.
One of the oldest technology firms in Nigeria, SystemSpecs is home to some of the most popular fintech products such as Remita and Paylink, as well as one of the most iconic human resource management solutions, HumanManager.
According to Obikile, who oversees the development of SystemSpecs’ payment and data infrastructure, growth in the payment technology sector has been attributed to the growing demands for digital products and considered a response to restrictions around cash. However, there are also uncertainties and ambiguities associated with new regulations that will become clear as the players engage more with the regulators.
She identified some of the regulations posing the most challenging to players in the payment ecosystem.
“The Know Your Customer (KYC) policy and updated guides to charges are some of the most challenging regulations in the fintech sector currently,” said Obikile. “While the overall intention is to drive financial inclusion and combat money laundering and fraud, obtaining and verifying KYC information has become challenging especially for those targeting the underbanked.”
She noted that calls for customer data acquisition and verification from data custodians come at sunk costs that are difficult to pass on to consumers if the regulated pricing must work. Also sometimes, data is not readily available and when it is, it does not always come in usable formats.
Obikile, therefore, called for the big stick of KYC compliance to be complimented by the carrot of data availability if regulation and innovation are to be simultaneously successful in the financial technology industry as data is the oil that lubricates the wheel of innovation in the fintech industry.
The fintech expert also urged the Central Bank of Nigeria (CBN) to enforce compliance with the open banking regulation. This will make the KYC easy and aid the development of data driven, customer-centric products.
She further encouraged regulators to engage and collaborate more with the fintech players.
“It is in engagement by regulators that they will better understand industry dynamics, and the feedbacks from such interactions will be very useful in formulating successful policies,” Obikile concluded.