The Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, has said swift laborsaving and technological upheavals over the past decade have impacted almost every facet of human endeavour, including financial service delivery in the country, says a today’s report on Gaurdian.
The apex bank boss noted that innovations have transformed the way Nigerians learn, communicate, and deliver services, noting that continuing innovation such as robotics, artificial intelligence (AI), and blockchain technology has tremendous potential for further disrupting the financial service sector.
Emefiele admitted that the impact of technological innovations was profound in the financial service system, as digital finance and financial technology (Fintech) had experienced rapid growth, disrupting conventional banking models and opening up new possibilities for designing and distributing financial services.
Speaking at the 19th edition of the National Seminar on Banking and Allied Matters for Judges, organised by the Chartered Institute of Bankers of Nigeria (CIBN), in Abuja, Emefiele said the report of Financial Stability Board (FSB), dimensioned the drivers of the innovations to supply and demand-side factors.
“Technological progress spurred by the widespread availability of ICT infrastructure is a key driving factor which has opened up a whole new vista in the provisions of unique access points for financial services whilst driving down the cost of delivering the services.
“Application Programming Interfaces (APIs), and mobile devices, which have become a key aspect of consumers’ daily lives globally with their greater functionality like cloud computing, have offered advantages such as economies of scale, flexibility, operational efficiencies and cost-effectiveness.
“Digitisation has also spurred consumers’ increased demand for improved and more convenient experiences across the services that they use and demographic factors such as the growing financial influence of younger generation aptly referred to as digital natives are driving demand.
“Digital finance can deliver enormous benefits, not just for the payments system but also for the financial wellbeing of the citizenry and the economy at large. It improves competition, increases efficiency and revolutionises financial services.”
However, he noted that though innovations and digitisation of financial services bring tremendous gains to consumers and the financial system at large, they also pose significant risks for the industry.
He maintained that the risk of cyber threat was significant given the level of reliance of market players on infrastructure and digital technology, noting that the severity of cyber-attacks have multiplied in recent times, breaching the defenses of several institutions successfully.
Emefiele stated that the damage caused by successful attacks extends beyond financial losses to undermined trust in the financial system that may impair the benefits reaped from the advent of digital technology, saying that failure to effectively address cyber risks may cause the system-wide crisis.
He noted that by exerting competitive pressure on the conventional financial institutions, digital finance poses a risk to the stability of the entire financial system, saying that policymakers should be focused on ensuring that the environment is conducive for innovations to thrive whilst managing risks that it might pose.
In his remarks, President and Chairman of Council, Chartered Institute of Bankers of Nigeria (CIBN), Uche Messiah Olowu, said in today’s global economy, phenomenal technology advancement has been the game changer and driving force behind most business activities.
He noted that the digital disruption, with the wider and far-reaching potential impact on every facet of economic life especially in the financial services sector, is a growing source of anxiety to all stakeholders.
Olowu maintained that new digital modes and channels of service delivery in the sector come with an unprecedented legal and ethical risks as well as communication, which outpaces the ability of social, economic, and legal frameworks to keep pace with it and thereby falling foul of the law.
“The global emergence of technology and digital-driven initiatives such as crypto-currency, AI, blockchain, and open banking, aimed at customer incentivisation and efficiency has enlarged the scope of rendering financial services beyond the traditional model and is creating opportunities for non- bank organisations to offer financial services with fewer regulations.
“In Nigeria, the growth of our financial landscape through the adoption of technological and digital-driven innovations is unprecedented. We are currently experiencing a paradigm shift from the traditional banking approach to a digital banking service model leveraging on technology.”
However, he noted that the development will require more than ever before, a robust, well prepared, futuristic, competent, efficient legal and regulatory environment to withstand the possible challenges without necessary stifling off creativity and innovation.
Chief Justice of Nigeria and Chairman, Board of Governors, National Judicial Institute, Ibrahim Tanko Muhammad, said the speedy resolution of financial disputes is an economic development catalyst, as investors and other financial institutions will remain confident that their investments are safe.
“It is a known fact that banking all over the world is regulated by a set of laws, rules, and regulations peculiar to each jurisdiction and it goes without saying that depositors, as well as other investors, must be assured of the protection of their assets and investments in the event of a bank distress,” he said.