·As BOFIA amendment scales Second Reading
Senate on Thursday raised fresh concerns over growing vulnerabilities within Nigeria's rapidly expanding digital financial ecosystem, warning that without urgent legislative intervention, some large fintech and technology-enabled financial service providers can evolve into systemic risks capable of destabilising the national economy. This followed the lead debate on a critical amendment to the Banks and Other Financial Institutions Act (BOFIA) 2020, sponsored by Senator Adetokunbo Abiru and co-sponsored by all members of Senate Committee on Banking, Insurance and Other Financial Institutions.
The bill seeks to empower Central Bank of Nigeria (CBN) to formally designate, register and impose enhanced supervision on Systemically Important Institutions (SIIs), including non-bank fintech firms whose operations have become central to Nigeria's financial stability.
Leading the debate, Abiru said Nigeria's financial system had undergone a dramatic transformation in the last decade, with mobile money operators, digital lenders, switching and settlement companies, wallet providers and payment service banks now serving tens of millions of Nigerians.
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These entities, he stated, processed huge transaction volumes daily and controlled vast stores of sensitive behavioural and financial data, yet the laws governing them no longer reflected their influence or interconnectedness.
He warned that while the BOFIA Act granted CBN power to identify systemically important banks, it did not anticipate the reality that a non-bank fintech platform, because of its market dominance, data concentration or technological capacity, could pose risks equal to or greater than those of traditional financial institutions.
Abiru said, "Some fintechs now operate at scales that rival mid-sized banks. Their data holdings carry national security implications, yet we cannot say with certainty where all such data is stored or who has access to it."
He stated that some operated within foreign-owned structures, offshore servers and opaque beneficial ownership networks that undermined regulatory visibility.
The senator cited the April 2024 regulatory halt on customer onboarding by several fintech firms due to KYC, AML and suspicious transaction concerns, describing it as evidence that "the scale of these institutions has outgrown existing regulatory tools".
To address the gaps, the amendment proposes five key reforms: creating a statutory basis for designating fintechs as SIIs; establishing a national registry to ensure traceability and beneficial ownership disclosure.
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It also sought to empower CBN with enhanced prudential tools tailored to digital institutions; strengthening data sovereignty; and bolstering consumer protection and systemic stability.
Abiru rejected proposals for a new standalone fintech regulatory agency, warning that it would create duplication, fragmentation and higher administrative costs.
He said global best practice favoured integrating fintech oversight within central bank structures, while strengthening inter-agency collaboration with bodies, such as the SEC, NCC, NITDA, CAC, FCCPC and the Office of the National Security Adviser.
During the debate, Senator Natasha Akpoti-Uduaghan added a social dimension to the conversation, drawing attention to widening income disparities affecting young Nigerians who earn their living through global digital platforms.
Akpoti-Uduaghan cited what she described as "huge discrepancies" in payments made to Nigerian creators on platforms, such as Facebook, sometimes as low as 50 cents per 1,000 views, compared to $10-$30 paid to U.S. creators for the same content.
She warned that such inequities threatened financial inclusion and undermined the earning prospects of Nigeria's booming population of digital entrepreneurs, calling for stronger regulatory engagement with global technology companies to protect local creators.
The bill was referred to Senate Committee on Banking, Insurance and Other Financial Institutions for further legislative work after scaling Second Reading.
