The past few years have witnessed unprecedented growth in the fintech ecosystem with innovations like mobile payments, loans, investments and blockchain technology. This sector has witnessed immense growth as more people pivot from traditional banks to digital services.
The rapidly-growing sector has also caught the eye of financial and market regulators who are now evaluating their existing rules and adopting new regulations to accommodate the burgeoning opportunities associated with the fintech sector.
In a Nairametrics webinar on “creating synergy between fintech players and regulators,” the Chief Economist at Nigeria’s Securities and Exchange Commission (SEC), Okey Umeano, iterated the fact that Nigerian fintechs should have an association that can speak to regulators on their behalf. According to him, “It is easier to work with associations than individual fintechs.”
The fintech space in Nigeria now has an umbrella body called ‘Fintech Association of Nigeria’ that is fostering an ecosystem that supports all stakeholders to achieve a thriving and growing Nigerian Fintech industry.
In an interview with Dr Babatunde Obrimah, COO of Fintech Association of Nigeria, he explained the role that the Association is playing in fostering better collaboration between regulators and players.
What is Fintech Association of Nigeria and what do you do?
Fintech Association of Nigeria is actually an ecosystem association. The objective is to be able to bring everybody within the Fintech or tech-enabled space together, to share ideas and grow the tech space.
Fintech, technically, is like a buzzword but today, we have 20 different sectors represented in the Association which cuts across, payments, lending, incubator banks, startups consulting, mobile money, blockchain, ICT, financial services, education, incubation and accelerator companies, health care, telcos, manufacturing, investment and venture capitals. We have legal law firms, media companies, insurance companies, Agric, and other professional bodies and association. So, the whole idea is to bring everybody together because everybody plays a role within the ecosystem.
Primarily we are driven by three objectives:
The first objective is to connect, that is, to bring everybody within this space together, network and share ideas. I mean, there are a lot of excellent solutions being developed locally and there’s no point going to pay millions of dollars for a solution that can be done locally. It’s only through networking and being able to bring everybody together that we can create that awareness.
The second objective is to accelerate; being able to show that we support technological growth in the country across board. The future is all about digitization and that’s the only way to go. We either innovate or die. That’s just the truth. So, Africa needs to get to that stage and we see ourselves as part of that move to ensure that there’s technological growth across the board.
The last objective is to advocate to ensure that there are progressive revolutionary reforms; that policies and regulations issued are progressive and support creativity and innovation for the Fintech ecosystem.
These are the things that drive us, ultimately to ensure that the Fintech ecosystem in Nigeria is one of the best in the world.
What challenges do you face as an association?
I would say that the major challenge we’ve faced is trying to get everyone within the ecosystem into the association, such that we can speak with one voice on issues. It gives us strength as a Fintech ecosystem because, in the banking sector, they have the bankers committee, which is made up of both the regulator and the operators. And then they also have an association of bank CEOs, and they also speak with one voice on issues that affect them, which is something we’ve not been able to achieve within the Fintech ecosystem.
So, I think that’s my greatest challenge is how to achieve that. Being able to speak with one voice when there are issues, policy issues in particular. We’ve started the process. There’s a committee we call ‘Aligning fintechs to speak with one voice.’ We’ve also invited other associations to join us. We just had one meeting and we hope that we can scale it to the point of developing an MOU that works for everyone.
Joining the Association is also easy. You simply visit the website and select the membership category that suits your organisation. Everything is done online, including payment.
For a fintech company to seek your help, do they have to be registered with you?
It’s a paid Association. Startups that don’t pay cannot be members of the association, but that does not mean that they’re not fintechs. In speaking for fintechs, therefore, we are not only speaking for our members, but for the ecosystem. So, we also attend to non-member fintechs who need our help and in this way, some of them end up joining us.
Our benefits cover them too. Although as a member, you get, the benefits that are specific to members, but certain services are ecosystem-based.
We also have a group of members that are non-paying, for example, media houses and universities. We call them associate members and we allow them to be non-paying because there are other mutually beneficial relationships we can explore.
What measures have you taken to foster better collaboration between regulators and fintech and how are the players working with the government?
There’s a document called the Fintech roadmap for the capital market. The committee that worked on that document was chaired by the Fintech Association of Nigeria and the document was launched in October 2019. People from the capital market, law firms and other stakeholders helped to develop the document. From that document, we have the blockchain regulation and crowdfunding regulation emerging.
So, we work with regulators. we actually have a forum called the regulator forum and we have representatives of regulators from CBN, SEC, Nikon, NITDA, NDIC, NFIU. At the directors level, we meet quarterly to discuss issues that affect the Fintech ecosystem.
By its nature, technology will always be ahead of regulation but the whole idea is to bridge the gap by coming together to iron out issues. It’s a growing relationship and that’s why the regulators’ forum was inaugurated in September last year. We’ve only had three meetings thereafter and although it’s still a young forum, regulators engage us when policy documents are released.
There are policy issues and there are circular issues. They contact us for our input when policy issues arise but may not do so for circular issues. However, we engage where we think that the industry is negatively affected.
Let me give you one example, for the circular to stop banks from dealing with local cryptocurrency exchanges, we worked with other stakeholders in the industry to develop a response that was shared with SEC, CBN and the national assembly. In it, we gave suggestions on regulations that should govern crypto assets and I know that it is receiving attention.
Can you give an example of a time when you tried to mediate in favour of startups?
For the policy by SEC on stock trading platforms, we have been working with Chaka and SEC and a lot of discussions have gone on. I know that SEC has done a couple of inspections now on Chaka and there is a new license that is being looked at for that category. In summary, progress has been made.
A financial system is as stable as the regulations that govern it. There have to be regulations but the questions are: What should be regulated? How should it be regulated? Why the regulations? Should fintechs be regulated the same way as banks or stockbrokers, for instance?
These are some of the ongoing discussions and we need to be able to work out an acceptable system with the regulators without jeopardizing the economy.
I think that regulators are driven by three main things: consumer protection, investor protection and economic stability. How then do we ensure that those three concerns of regulators are mitigated? We are working with them, Chaka in particular. We have had several engagements with SEC that will also affect every other person in that sector.
In terms of raising money for most startups, do you assist in pre-seed seed funding in any of a startup’s funding stage?
What we do is connect. That’s our first objective, and so, we connect startups to investment and venture capital members of the Association. Everybody plays a role in the Association. I mean, there’s no way you’re going to start off your route without legal advice, you’re going to need consulting advice. You’re going to need the investors and investment from some venture capitalists if you’re looking for funding.
In the area of consulting, firms like PWC, KPMG, and Deloitte can also offer assistance to our startup members.