By Bayo Oguntade (Finance/Money Market Correspondent, in Lagos)
Since the introduction of Financial Inclusion by the Central Bank of Nigeria in the Nigerian banking space through the launch of the National Financial Inclusion Strategy in 2011 as adopted, the scheme witnessed tremendous growth in several financial inclusion indicators, especially in its early years of implementation in 2014 but could not be sustained in the later years, particularly in 2017.
According to ResearchGate, the scheme which set for itself an initial target to financially include 80 percent of Nigeria’s bankable adult population by the year 2020 could only achieve 64 percent at the end of 2020 - no thanks to the economic downturn, security challenges in the northern part of the country, poor literacy rate and low trust in financial services providers as some of the factors militating against the project.
There is no doubt that the banking industry has embraced digitization which has revolutionized banking operations. The introduction of the Financial Inclusion Policy to bring on board the unbanked public in the rural areas into the banking space is another catalyst that has positively affected the banking industry thus heralding the entry of Financial Technology (FinTech) firms offering payment and other bank-related services. As welcoming as the entry of these FinTechs is, it however brought with it a lot of emerging risks and new challenges into the banking industry, especially for the Internal Audit Function.
These emerging risks and challenges as well as other issues dominated discussions during the 53rd Quarterly General Meeting of the Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN) hosted by ProvidusBank Limited with the theme: ‘The Role of Audit in the FinTech Era’. The quarterly meeting had in attendance some CBN Directors and their representatives and other stakeholders in the industry like the Law Enforcement Agencies, Audit firms, allied groups, etc.
Speaking during his welcome address, the Chairman of ACAEBIN, Mr. Felix Igbinosa appreciated the Chief Host and the Managing Director/CEO of ProvidusBank Limited, Mr. Walter Akpani, and his management team for their efforts in ensuring that the meeting became a reality. Mr. Igbinosa also pledged the Association’s commitment to collaborating with all stakeholders and other member organizations to ensure a safe and secure banking environment. He, however, bemoaned the continuous rise in incidences of fraud on the FinTech platforms which he described as a challenge to Internal Auditors. He said, “On the flip side of this laudable initiative is the leap in incidences of fraud perpetrated through these payment platforms which has caused losses to the banks. This is a major challenge to us the Internal Auditors.”
Mr. Igbinosa called on the Central bank of Nigeria, to as a matter of urgency, intensify its oversight in the FinTech space with stronger regulations that would help reduce losses to banks. He said, “These losses to the industry would be minimized if the FinTechs take the issues of Know Your Customers (KYC) and Know Your Customer’s Business (KYCB) as seriously as the banks. This is where we are appealing to the Regulators to step in and ensure that FinTechs follow due diligence in their operations, especially their customer onboarding/KYC processes and there is no better time to act than now.”
The Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN), a not-for-profit organization was established over two decades ago with the primary objective of fostering cooperation among Chief Audit Executives of banks (members), promoting competence, ethical standards, and professional behaviour among member organizations. It also conducts capacity development programmes for her, members, and other internal audit staff of member organizations. The Association’s membership cuts across all Deposit Money Banks (DMBs), Merchant and Development Banks including the Internal Audit Department of the Central Bank of Nigeria. NNL.
