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CBN: Digitisation supports banking supervision, regulatory compliance

Central Bank of Nigeria (CBN) says digitisation supports effective supervision of the financial system, data access and management.

Aisha Ahmad, CBN deputy governor, Financial System Stability and chairman, FITC Board, disclosed this during the opening of the 2019 CBN/FITC Continuous Education Programme for Directors of Banks and Other Financial Institutions held in Lagos.

The deputy governor was represented by the director, Banking Supervision Department, CBN, Ahmad Abdullahi at the event.

Speaking on the theme: “Digital Transformation – Repositioning Financial Institutions: Perspectives and Imperatives for the Board” she said the world is experiencing a digital revolution and that digitisation is also supporting risk identification, regulatory compliance and enhancing sectoral performance.”

In his opening remarks, Tunji Ajiboye, acting managing director/CEO, FITC, said financial institutions were recognising the importance of technology and must respond to digital transformation. He said the competition facing banks was enormous as financial technology firms and even telecommunication companies are beginning to offer some bank-related services.

Ajiboye said: “Telcos are giving banks a run for their money. Hence, Banks need to be proactive in recognising the impact of digitisation on their services and overall operations. It is important to understand and constantly discuss how technology is transforming the banking landscape”.
FITC is already incorporating technology in the delivery of its training, consulting and research services to the industry, he said.

He said the programme, which is FITC’s 35th edition and the 14th in collaboration with the CBN has demonstrated the readiness and commitment of the FITC board to continually upgrade the competencies and capacity of financial institutions to deliver and meet customers expectations.
He said banks had to embrace technology if they want to remain competitive while also advising financial institutions’ boards to understand the impact of digital transformation in their books and their disruptive tendencies in their organisations.

The onus is on the board and management of the Financial Institutions to be more proactive in understanding digital services and the impact they can have on their organisation by ensuring that everyone in their organisations understands the role of digitisation in today’s banking services, he said.

Continuing, Ahmad, said digital innovations ranging from self-service technologies such as the cell phones, online and mobile banking, Artificial Intelligence, Big data, blockchain technology, distributed ledgers, among others, have greatly challenged orthodox systems and helped improve the operational efficiency of financial institutions as they respond to customer demands for more innovative services. According to her, digitalisation is affecting everything finance while its impact is transformative.

The Deputy Governor said digitisation offers the promise of credit facilitation, faster, cheaper, more transparent and user-friendly financial services and raises the prospect of expanding financial inclusion, especially in developing countries such as Nigeria.

She, however, added that there are operational risks associated with digitalisation, which include; cybercrime and outsourcing, technology problems, upset between transparency and privacy, shadow banking, regulatory arbitrage, among others. “The preceding underscores the need for repositioning the financial ecosystem to help extract the many gains while mitigating the attendant risks.

“Interestingly, to remain competitive, financial institutions rather than play catch-up, are at the fore of the digital revolution through the provision of innovative digital services; such as the UBA “Leo” App, “Tamada” by Access Bank and other innovations aptly illustrate this point. Ahmad also pointed out that regulatory authorities are exploring digitalisation, which has birthed the terms “RegTech” and “SupTech.”

She commended FITC and other partners for the effort in sustaining this programme, adding that the forum presents a unique platform for knowledge sharing and continuous capacity development for top management- a key requirement in keeping up with the ever-competitive and rapidly evolving banking and financial services industry.

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