By Kingsley Samuel
As digital financial services expand in Nigeria, compliance must go beyond meeting regulatory requirements to protect customers and build trust, the Head of Compliance at FairMoney Microfinance Bank, James Edeh, has said.
Edeh said compliance should be built into the way financial products are designed and delivered, including how institutions handle customer information, explain product terms, monitor transactions and resolve complaints.
In an article titled “Compliance as a Foundation for Trust in Tech-Enabled Banking,” he said customers may not see the controls behind everyday banking services, but those safeguards are essential to their confidence.
“The systems that sit behind these interactions — the controls governing how customer information is handled, how transactions are monitored, how products are communicated and how complaints are addressed — are central to the confidence on which banking depends,” he said.
Edeh said technology could help widen access to payments, savings and credit, but financial institutions must ensure that customers understand the services they use and how their personal information is handled.
He cited the Enhancing Financial Innovation and Access’ 2023 Access to Financial Services Survey, which found that formal financial inclusion rose from 56 per cent of Nigerian adults in 2020 to 64 per cent in 2023, while 26 per cent remained financially excluded.
“Technology can help broaden access to the formal financial system by making payments, savings and credit more accessible,” he said. “Customers need to know that their funds are appropriately safeguarded, that their personal information is handled responsibly and that the products they use are presented in a manner that is clear and fair.”
According to him, Nigeria’s evolving consumer protection framework reflects growing expectations around transparency, fairness, responsible conduct, data protection and consumer redress, including in digital and non-traditional lending.
He said fintechs and microfinance banks could expand access and improve convenience, but must also manage the risks that come with scaling their services.
“The goal should not be to slow innovation through unnecessary controls. Rather, it should be to ensure that innovation is developed within a framework that gives customers confidence in the services they are using,” Edeh said.
He urged financial institutions to consider compliance early in product development, rather than waiting for regulatory problems to arise. Decisions involving data, lending, product design, customer communication and complaints management, he said, all have implications for consumer protection.
Edeh said this was particularly important in digital lending, where wider access to credit should be matched by responsible practices. Customers, he added, should receive clear information about product terms, charges and other material features, and have credible channels for raising concerns.
He said FairMoney Microfinance Bank, which is licensed and regulated by the Central Bank of Nigeria, operates within a prudential framework intended to support the safety and soundness of the financial system. Eligible deposits are insured by the Nigeria Deposit Insurance Corporation, subject to applicable coverage limits and scheme conditions, he added.
The bank’s responsibilities also include transparency, data protection, responsible lending and effective complaint resolution, in line with applicable laws and regulations, Edeh said.
“The purpose of compliance is not simply to determine whether an institution has met a particular rule,” he said. “At its best, it provides a structured way of ensuring that growth, innovation and commercial objectives remain consistent with the interests and protection of customers.”
He said the long-term success of digital finance would depend not only on technology, but also on the governance surrounding it.
“Customers may be attracted initially by convenience, speed or access. Their longer-term confidence, however, will depend on whether institutions demonstrate consistency, transparency and a clear commitment to protecting their interests,” Edeh said.
He added: “Technology may change how banking is delivered. It does not change the fundamental relationship between a financial institution and its customers. That relationship remains grounded in trust.”
