An Appraisal of Financial Technology in Nigeria: a Critical Analysis of Its Emergence, Impact and Regulatory Framework


Since 2007, Financial Technology has enjoyed rapid development in Nigeria and same is still on the rise. Often termed as the ‘new disruptive market force’, FinTech has challenged the traditional means of providing financial services in the country by improving activities in finance such as money transfer, payments, lending and borrowing, investment management and so much more. The technology has spurred the start-up and maintenance of several businesses, providing easy access to their services and has prompted development in today’s society. The use of such technological innovation has predicated the need for a framework to maintain stability in the financial sector, to ensure hitch-free operations and prevent the ever-looming threat of cybercrime through its stringent provisions. The paper examines Financial Technology in Nigeria, discussing extensively; its innovative growth and impact. The paper also briefly discussed the regulatory frameworks governing the sphere of Financial Technology in Nigeria and concluded by recommending the establishment of a cohesive and specific body for regulating FinTech activities in Nigeria.

Keywords: Financial activities, Technology, Services and Products, FinTech, Impact, Regulatory Framework, Nigeria.


The inception of technology to carry out activities relating to finance is one that took Nigeria by storm. Coming into an uncharted territory such as this, Financial Technology has quickly become a disruptive force, spreading its innovative influence into different key areas of the financial sector. This can be evidenced by the exponential growth in mobile money operations from an average monthly transaction value of US$5 million in 2011, to a whooping US$142.8 million in 2016.[1] FinTech firms have enjoyed substantial growth and investments in the untapped market of Nigeria with US$400 million being invested into 3 Nigerian FinTech firms in November 2019 alone.[2]

Financial Technology, often shortened to FinTech, refers to the fusion of financial services and information technology for the purpose of improving and simplifying finance related activities. It is defined as the new applications, processes, products or business models in the financial services industry, composed of one or more complementary financial services and provided as end to end processes via the internet.[3] According to a study, which reviewed over 200 scientific pages citing FinTech before formulating a definition, Financial Technology can be defined as a new financial industry that applies technology to improve financial activities.[4] Simply put, FinTech is the use of technology to perform financial activities which would usually be carried out by the traditional means. The use of this innovation is vital because it simplifies and expedites financial processes that are more or less hectic and tedious when performed in the ‘old fashioned’ way. Thus, activities such as money payment and transfer, lending, asset management etc. which were usually handled by physical cash (paper money), human interaction and trips to a bank, can now be done digitally; even from the comfort of one’s bed. A practical example is: through the use of a mobile banking application such as ALAT by Wema Bank, an individual can send money to another person (with little or no charges) without having to go to a Wema branch to deposit physical cash into the account of that person he intends to transfer money to. FinTech reduces the stress associated with the traditional means of carrying out financial activities while still producing efficient results at all times.

The prevalence of FinTech in Nigeria cannot therefore be downplayed. FinTech firms in collaboration with banking, insurance institutions or even as institutions on their own, provide access to financial services through the internet, software applications, mobile devices, cloud services and many more. Evolution of the industry is now such that even the banking institutions create their own mobile banking software.[5] The most important players in the Nigerian FinTech market include: Interswitch, Piggybank, Flutterwave, Paystack, PayPal, PiggyVest, Paylater and online retail stores such as Konga, Jumia, et cetera. These firms provide a vast array of services from banking to savings and investments.

Rise of Financial Technology in Nigeria

Financial Technology has been around in one form or another virtually as long as financial services have.[6] However, it wasn’t as popular and utilized back then as it is now.[7] Before the prominence of FinTech in Nigeria, financial transactions were carried out with paper money and greatly involved human interaction. People had to carry physical cash to financial institutions to perform any transaction and had to deal with the risk of moving around with huge sums of money.[8] This traditional method affected Nigeria as much as it affected its citizens. The Central Bank of Nigeria consistently used scarce resources to maintain and print banknotes. Nigeria, in a bid to maintain these banknotes, incurred a lot of cost. These reasons necessitated the establishment of an easier process to perform financial activities.

In 2007,[9] Financial Technology finally received public recognition and widespread adoption when the CBN launched different policies and reforms to cut back on the massive amount of recurrent cost they were incurring. The most notable of these policies is the Payment System Vision (PSV) 2020. According to the Payment System Vision 2020, the goal of the CBN is to “create an electronic payment infrastructure that is nationally utilized by all sectors of the economy and all regions of the country and internationally recognized as being world class.”[10]  The PSV 2020 paved way for the development of financial technology in Nigeria as several FinTech firms took advantage of its provisions to establish themselves in the country.[11] The first firms to establish themselves were: Interswitch (2008), eTranzact (2008), Remitta (2008), Paga (2009). These firms ran the FinTech industry in the early days and instituted the first online means for mobile payment in Nigeria. Some of its products which are still in use today include: Quickteller (Interswitch), Verve debit card (Interswitch), PocketMoni (eTranzact), my242 (Paga) and so on.

Since the establishment of the earliest FinTech firms, the FinTech industry has witnessed steady growth. Continual enlightenment, advertisements and the eventual realization that the services provided by FinTech firms are faster, easier and also safer to use, have been effective in the proliferation of individuals making use of FinTech media for their financial transactions. These FinTech firms and their services have also inspired banks to set up their own mobile banking apps, online and USSD[12] services like ALAT by Wema Bank, UnionMobile by Union Bank, *770# by Fidelity Bank, *737# by GTBank et cetera.

The growth of FinTech was also aided by technological advancements, the ever-increasing population of smart phone users and internet coverage.[13] According to a 2017 survey report carried out by PWC,[14] over 62% of customers will use mobile applications to access financial services within the next 5 years.[15] This postulation, although still under progress, has shown signs of accuracy with FinTech firms such as Paga reporting over 12 million customers and Flutterwave reported to have processed about 100 million transactions since its establishment in 2016.[16]

Now, almost all financial activities which require human interaction and physical presence can be done with mobile applications, USSD codes and online services which are available on technological devices. At the rate at which FinTech is developing in Nigeria, it is projected that the technology will put the conventional means of performing activities out of business. In a distant future, we will have to choose between two FinTech firms and not between FinTech firms and “brick and mortar” financial institutions.

Impact of Financial Technology in Nigeria

The establishment and use of Financial Technology has resulted in massive development in the financial sector of Nigeria. Its influence since inception has waxed strong in the finance eco-system with continual innovations and ideas which reform the sector, resulting in swift development and growth whilst simultaneously reducing patronage of the conventional banking services. This gives an explanation of why it is referred to as “The Disruptor”.[17] The utilization of this technological innovation has aided in the stress-free start-up and management of several business ventures and online retail stores.[18] Also, the operation of banking activities in a most hedonic manner, the efficient and reliable management of finances/funds/asset and so many other things. For ease of understanding, this paper has highlighted the key areas of the financial sector FinTech has impacted in Nigeria. They are: Banking, payment and financial management.

  1. Banking: Financial Technology has greatly impacted the banking sector of Nigeria. FinTech strengthens the relationship between banks and customers by providing facile access to their services with reduced human interaction and dealings with physical cash. Without stepping into a bank or even going to an ATM, an individual can access top-notch banking and financial services like creating a bank account, money transfer, airtime/data transfer et cetera, 24/7 by using mobile banking applications such as U-Mobile[19], FirstMonie[20], Breeze Nigeria[21] or using USSD codes such as *737#, *966#[22], *329#[23] and so on. This technological advancement in the banking sector is also favorable to unbanked people who can access financial services with the above stated means. The use of FinTech services like mobile banking apps also aid the adoption of “cashless policy” which, without reasonable doubt, is safer for individuals in the society.
  2. Payment: The Nigerian payments landscape has significantly evolved over the past decade.[24] Although payments are still greatly done using physical cash, the number of mobile money transactions have increased significantly. Mobile money transactions have risen from 15.9 million in 2013 to 217.8 million as at 2019.[25] With the rapid adaptation of card payments in Nigeria and using the services FinTech firms such as Paga and Paystack, individuals can easily make payments to online stores and business ventures. Likewise, businesses can easily accept online payments.
  3. Financial Management: Financial Technology has refined the way individuals manage their finances. With FinTech services, there are now simpler ways to manage and track your finances using digital solutions which has reformed the traditional pen and paper or spreadsheet. Not only is it now easier and faster to track your finances, it is also safer. FinTech under this area, provides a wide range of services from saving using FinTech firms like Piggybank, to invoicing using firms such as Invoice Nig., and also expense management using firms such Kliqr.

Regulatory Framework for Fintech in Nigeria

Financial Technology has garnered so much influence in the financial sector in Nigeria.[26] Hence, there is a need for its activities to be regulated to ensure privacy, security in online financial transactions and protection of data. It is important to note that Nigeria does not have FinTech-specific statutes in force which goes to say that there is no direct and unified regulation to ensure FinTech activities are properly controlled.[27]  Nevertheless, numerous guidelines have been issued by the Central Bank of Nigeria and other commissions to regulate several aspects of the Financial Technological industry in the country. The guidelines principally regulate the digital payments sub-sector which has witnessed the highest amount of activity[28] since the establishment of Fintech firms. The main guidelines include:

Guidelines on Mobile Money Services in Nigeria

These guidelines were issued by the CBN in 2015 pursuant to Section 47(2) of the CBN Act, 2007[29] and its mandate of promoting a financial system in Nigeria. Mobile money services are financial services offered over mobile devices. It allows unbanked people to use their phones to achieve financial banking activities such as mobile payment (paying utility bills for example), money transfer et cetera. The guidelines therefore apply to firms that provide mobile payment services such as Interswitch, eTranzact and so on. The guidelines set out its objectives in Paragraph 3. They are:

  • To ensure a structured and orderly development of mobile money services in Nigeria, with clear definition of various participants and their expected roles and responsibilities.
  • Specification of the minimum technical and business requirements for the various participants recognized for the mobile money services industry in Nigeria.
  • To promote safety and effectiveness of mobile money services and thereby enhance user confidence in the services.

The guidelines further identify two models for operation in Nigeria[30] and they are: Bank Led and Non-Bank Led models. Under the Bank Led model, either a bank or a consortium of banks may provide mobile money services as part of its banking services. The bank or consortium must be a lead initiator. Under the non-bank led model, corporate organizations specifically licensed by CBN may deliver mobile money services to customers. Other than deposit money banks or telecommunication companies, corporate organizations may act as lead initiators of mobile money services under this model.

The guidelines also set out standards all mobile money operators must adhere to. The standards which are stated in Paragraph 7 of the Guidelines provide to wit:

All Mobile Money Operators shall:

  • Be licensed by the CBN.
  • Be issued a unique Scheme Code by the Nigerian Inter-Bank Settlement System.
  • Be issued unique short codes by the Nigerian Communications Commission (NCC).
  • Ensure that all telecommunications equipment is of a type approved by the NCC.
  • Register users of its scheme based on the technology standards and requirements of the guidelines.
  • Ensure that the registration process fulfills the Know Your Customer (KYC) requirements specified in the guidelines.

The various mobile money operators as identified by the guidelines include: Banks, Licensed corporate organizations, infrastructure providers, mobile network operators. The guidelines also provide the business rules[31], roles and responsibilities[32], and minimum technology standards[33] of each operator.

Guidelines on Operations of Electronic Payment Channels in Nigeria

These guidelines were issued by the CBN in 2016 pursuant to Sections 2(d) and 47(2) of the CBN Act, 2007. The electronic payment guidelines provide specific regulation on the use and operations of e-payment channels such as: Automated Teller Machines (ATM), Point of Sale (POS) Machines, Mobile Point of Sale (MPOS) machines and the internet.[34] Paragraph 1 of the Guidelines encapsulates standards and specifications for ATM technology, specifications for ATM deployment and operations, stipulations for ATM maintenance and security and penalty for failure to comply with its provisions. The guidelines also contain minimum standards[35] and specifications for POS card acceptance services.

These guidelines oversee payments made from these e-payment channels and regulate its installation and usage by ensuring a minimum set standard is met.

Guidelines on International Money Transfer Services

These guidelines were issued by CBN in 2014 pursuant to Section 29(d) of the CBN Act and Section 57 (2) of the Banks and Other Financial Institutions Act (BOFIA).[36] The main objective of the Guidelines as outlined in Paragraph 1.1 is to provide minimum standards and requirements for International money transfer services operations in Nigeria. These Guidelines are essential for operators of this service. It prohibits persons and institutions from providing international money transfer services without a license from the CBN.[37] The Guidelines further provide the process and requirements for acquiring the needed license for providing IMTS[38], some of which include: an application fee of 500,000 thousand naira or any other amount specified by CBN, a minimum paid-up share capital of 2,000,000,000 (2 billion) naira for Nigerian companies and US$1 million for foreign companies in their home country. The Guidelines also provide for overseas partnership which involves a money transfer operator engaging a foreign technical partner.

Regulatory Framework for the use of USSD for Financial Services in Nigeria

This regulatory framework was issued by the CBN in 2018 pursuant to Section 47(2) of the CBN Act and its mandate of promoting a financial system in Nigeria. The framework seeks to reduce the risks associated with the implementation and the use of USSD for financial services.[39] Examples of USSD services/codes (sometimes referred to as quick codes) in function in Nigeria are: Fidelity’s *770# which gives a customer access to their banking services and transactions, GTB’s *737#, Paga’s *242#, Glo’s *777# which gives customers access to their mobile services et cetera.

According to the framework, only Mobile Network Operators, Mobile Money Operators and licensed CBN entities such as financial institutions with a letter of no objection or letter of introduction from the CBN are eligible for the issuance of USSD codes[40] which are to be issued by the Nigerian Communications Commission.[41] The regulation makes provisions to ensure encryption for the protection of the integrity of the financial information[42] and this goes to the effect that all information passing through the USSD channel must be properly encrypted. It further imposes a transactional limit of 100,000 per customer, per day on all transactions conducted using USSD short codes and compels customers seeking a higher limit to execute a documented indemnity.[43] Customers also have the option to opt in/out of the USSD services.

The framework also provides that no USSD channel shall be deployed for financial services unless a deactivation mechanism, which allows users to block their account from operating USSD services is put in place.[44] Any participant who fails to comply with the provisions of the framework shall be punished by either the CBN or the NCC as provided in Paragraph 10 of the regulation.

Nigerian Data Protection Regulation

Right from time, Financial Technology and cybersecurity/privacy protection have been intertwined. For maximum and efficient performance, FinTech firms and their products require a vast amount of data and information from their customers. Most of the time, the data required by the firms are extremely sensitive and can be misused if it were to somehow land in the wrong hands. This privacy risk predicates a need for data protection. In light of this, the National Information Technology Development Agency (NITDA) established the Nigerian Data Protection Regulation in 2019 to regulate the processing of data in Nigeria. The regulation prohibits the collection and processing of data by both individuals and corporate organizations unless it is done for a specific lawful process upon the grant of consent by the data subject.[45]

The regulation further requires that data should only be stored for the period which it is reasonably needed[46] and should be discarded once such period expires. Paragraph 2.1(d) provides that the required data must be properly protected against all foreseeable hazards. In line with this, the regulation provides several measures which can be implemented in protecting data.[47]

Other frameworks which regulate FinTech activities in Nigeria include:

  • The CBN Consumer Protection Framework for Banks and other Financial Institutions which provides that customers’ financial and personal information must be securely stored at all times[48] and shall not be released to a third party without the written consent of the customer.
  • The Consumer Code of Practice Regulation drafted by the NCC in 2018 which enjoins Licensees to implement a policy to ensure proper collection, use and protection of information.[49]
  • Risk-based Cybersecurity Framework and Guidelines for Deposit Money Banks and Payment Service Providers to outline the minimum cybersecurity baseline to be put in place by Deposit Money Banks (DMBs) and Payment Service Providers (PSPs) in order to enhance their cybersecurity resilience.

It is worth mentioning that the CBN stands against cryptocurrencies, virtual currencies and virtual exchange. The position of the CBN is that virtual currencies are neither licensed nor regulated in Nigeria and dealers/ investors of any kind of cryptocurrency in Nigeria are not protected by law.[50]

As stated earlier, there is no specific regulatory framework or authority to regulate FinTech and its firms in Nigeria.[51] So, the government authorities tasked with regulating the activities of FinTech firms (depending on the services provided) are:

  • The Central Bank of Nigeria (CBN),
  • The Nigerian Securities and Exchange Commission (Nigerian SEC)[52],
  • The Nigerian Communications Commission (NCC),
  • The Corporate Affairs Commission.


Considering the rapid growth and massive impact of FinTech on the financial sector and its inherent dangers (such as cybercrime and exposure of personal data/information) in the use of its services, the writer avers that activities in the FinTech industry need to be regulated by one direct, specific and cohesive law. Although the efforts of the CBN and other government authorities are applaudable, a cohesive regulatory framework will promote certainty in the regulation of FinTech activities and ensure enforcement of punishment for contravention of stipulated standards. Also, a specified regulatory framework will get rid of the lacunas such as disharmony and ambiguity which exist in the current framework.

A unified FinTech policy will also promote the ease of doing business[53] in the country as easy references can be made to the policy during transactions i.e. the policy will serve as a guideline for operations of FinTech firms. Again, establishing a body to ensure regulation and punishment for contravention of FinTech laws will boost the trust and confidence of both individuals in the society and investors in the FinTech ecosystem. More users and more investors translates to more money, growth and development in the FinTech market, the finance sector in Nigeria and consequentially, Nigeria as a whole.

Thus, the writer is of the opinion that a direct and cohesive regulatory framework should be enacted. However, its implementation must be of such a nature that it must aid growth and stimulate innovation rather than kill it.


As highlighted in this work, Financial Technology has undergone substantial evolution over the years. It is definitely no easy feat to be established as an advanced technological innovation, especially in a country like Nigeria; where its indigenes have, in previous times, shown to be resistant to change. The disruptor has proven to be an efficient tool in the reformation of the financial sector of the country. Its usefulness in today’s financial field remains unmatched as evidenced by its constant development and impressive statistics. This development can be aided by an innovation-friendly regulatory framework to oversee its activities, prescribe and enforce punishments for breach of its provisions.

It remains to be stated that FinTech continues to evolve and, slowly but surely, we will enter an era of technological dominance. This would require a conscious body of laws targeted towards regulating FinTech activities particularly with the insurance of investors and customers’ money as well as their personal bio-data and, issues related to folding up or winding down of FinTech institutions. Conscious effort should also be made to modify such regulatory framework to properly regulate FinTech as it evolves.

About the Author

Odozi Michael Oluwatomisin is a Law Student, Afe Babalola University, Ado-Ekiti, Ekiti State; Email: [email protected].


[1] Central Bank of Nigeria (CBN) Statistical bulletin (figures have been translated using exchange rate as at 21 October 2016).

[2] Dario Betti, ‘Nigeria: The Rise of FinTech in Nigeria’ (2019) <> accessed 28 January 2020.

[3] Sanicola Lenny, What is FinTech? <> accessed January 27 2020.

[4] Schueffel Patrick, ‘Taming the Beast: A Scientific Definition of Fintech’ (2017) <> accessed 27 January 2020.

[5] UnionMobile by Union Bank is an example.

[6] Invoice, ‘Impact of FinTech on Business Growth in Nigeria’ (2020) <> accessed 29 January 2020.

[7] Now being the year 2020.

[8] Lead Web Praxis Media, Evolution of FinTech in Nigeria’ (2020) <> accessed 29 January 2020.

[9] In this year, the global financial crisis occurred. This also played an important role in the development of FinTech in Nigeria and the world.

[10] Bloomfield Law Practice, ‘FinTech regulation in Nigeria’ (2019) <> accessed 28 January 2020.

[11] It may be pertinent to note that the FG intend to review the PSV 2020 to set new target for FinTech under a proposed PSV 2030.

[12] Acronym for Unstructured Supplementary Service Data.

[13] Lead Web Praxis Media, ‘Evolution of FinTech in Nigeria’ (2020) <> accessed 30 January 2020.

[14] Acronym for Price Waterhouse Coopers. It is a consulting and accounting firm which provides professional services including audit and assurance, tax and consulting. In performing their services, they sometimes implement FinTech products.

[15] Invoice, ‘Impact of FinTech on Business Growth in Nigeria’ (2020) <> accessed 30 January 2020.

[16] Thefintechafrica, ‘Top 10 FinTech companies in Nigeria and their CEOs’ (2019) <> accessed 30 January 2020.

[17] Nigeria FinTech Survey (2017) <> accessed 1 February 2020.

[18] Jumia and Konga are examples.

[19] By United Bank for Africa (UBA).

[20] By First Bank Plc.

[21] By Standard Chartered Bank Nig. Plc.

[22] By Zenith Bank Plc.

[23] By FCMB.

[24] Invoice, ‘Impact of FinTech on Business Growth in Nigeria’ (2020) <>  accessed 3 February 2020.

[25] CSL Stockbrokers, ‘Nigeria’s FinTech industry 2020: The growth frontier of the new decade’ (2020) <> accessed 3 February 2020.

[26] Evidenced by statistics, investments and exponential growth as has been highlighted in this paper.

[27] Although, there is a proposed Electronic Transactions bill pending before the National Assembly. The bill seeks to regulate certain aspects of FinTech services.

[28] Olayanju Phillips, ‘An Overview of the Regulatory Framework of FinTech in Nigeria’ (2019) <> accessed 30 January 2020.

[29] The Act confers powers on the CBN to issue guidelines to promote and facilitate development of efficient and effective system for the settlement of transactions, including the development of electronic payment systems.

[30] Paragraph 5 of the Guidelines on Mobile Money Services in Nigeria.

[31] Paragraph 7 of the Guidelines on Mobile Money Services in Nigeria.

[32] Paragraph 8 of the Guidelines on Mobile Money Services in Nigeria.

[33] Paragraph 14 of the Guidelines on Mobile Money Services in Nigeria.

[34] Olayanju Phillips, ‘An Overview of the Regulatory Framework of FinTech in Nigeria’ (2019) <> accessed 30 January 2020.

[35] Paragraph 2.3 of the Guidelines on Operation of Electronic Payment Channels in Nigeria.

[36] The Act confers powers on the CBN to issue guidelines for the maintenance of adequate and reasonable financial services to the public.

[37] Paragraph 2.1 of the Guidelines on International Money Transfer Service.

[38] Paragraphs 2.2 and 2.3 of the Guidelines on International Money Transfer Service.

[39] Paragraph 3 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[40] Paragraph 5 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[41] Paragraph 5.2 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[42] Paragraph 6 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[43] Paragraph 6.9 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[44] Paragraph 9 of the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[45] Paragraphs 2.1 and 2.3(i) of the Nigerian Data Protection Regulation.

[46] Paragraph 2.1(C) of the Nigerian Data Protection Regulation.

[47] One of such measures is data encryption. Recall that earlier in this work, encryption was discussed as a measure for protection of information under the Regulatory Framework for the use of USSD for Financial Services in Nigeria.

[48] Paragraph 2.6.1(c) of the CBN Consumer Protection Framework for Banks and other Financial Institutions.

[49] Paragraph 44 of the Consumer Code of Practice Regulation.

[50] This position was reiterated at the ‘Virtual Currencies Not Legal Tender in Nigeria’ Press Release held in February, 2018.

[51] It may be pertinent to note that the Company and Allied Matters Act (CAMA) regulates the activities of FinTech firms since they fall under the category of companies. However, the Act does not make appropriate provisions for financial institutions.

[52] The CBN and the Nigerian SEC are regarded as the apex financial regulatory bodies having taken steps to include FinTech in their existing laws.

[53] Olayanju Phillips, ‘An Overview of the Regulatory Framework of FinTech in Nigeria’ (2019) <> accessed 4 February 2020.

2 thoughts on “An Appraisal of Financial Technology in Nigeria: a Critical Analysis of Its Emergence, Impact and Regulatory Framework

  1. This is quite an erudite piece, very precise and insightful. I appreciate the writers recommendations especially that which relates to the fact that direct and cohesive regulatory sandboxes would bring about desirable effects in the Nigerian Fin-tech arena.

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