The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, says rising transaction volumes by non-banks threatens financial stability in West Africa.

He stated this on Monday at the 10th meeting of the College of Supervisors for Non-Bank Financial Institutions of the West African Monetary Zone.

Cardoso, was represented by the apex bank’s Acting Director of the Other Financial Institutions Department, Abayomi Arogundade.

He said, “We reiterate the importance of monitoring trends, risks and innovations of NBFIs/OFIs (Non-Bank Financial Institutions or Other Financial Institutions) as their increasing transaction volumes pose major financial system stability risk.

“Fintech loans are one of the most commonly reported innovation. While overall this may appear small in relation to the size of credit by DMBs, some jurisdictions globally, have noted a growing trend in the volume of these loans.

“In many cases, fintech credit is provided via electronic platforms that connect lenders to borrowers – in which case the platform takes the role of a financial auxiliary.

“In some cases, however, loans are taken on the balance sheet of these platforms (even if it is short-term), in which case the platforms are akin to new types of financial intermediaries. These entities are typically fintech firms that offer applications, software, and other technologies to streamline mobile and online banking.

“In many jurisdictions, these digital firms have a banking license and are subject to prudential requirements or they may just be regulated as Fintech payment service firms. Innovations linked to crypto or stablecoin assets were also reported by some jurisdictions,” he added.

Non-bank financial firms offer financial services but don’t hold banking licenses and therefore can’t accept deposits. (Channels TV)

• Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN)

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