In response to the Central Bank of Nigeria’s (CBN) April 2024 ban on new account openings by key fintech players, companies like Kuda Bank, Moniepoint, OPay, and Palmpay are doubling down on compliance and fraud monitoring efforts. This shift represents a significant departure from the previous industry stance where compliance was often viewed as a hindrance to growth. Traditionally, fintechs prioritized rapid account setup and minimal Know Your Customer (KYC) requirements to speed up onboarding and gain a competitive edge. However, under new regulations, they are enhancing compliance measures to counter rising fraud concerns and meet regulatory demands.
Staff Expansion and Talent Sourcing
To meet the Central Bank’s stricter standards, Nigerian fintechs have embarked on a compliance-focused hiring spree, bringing in top talent from commercial banks and other fintech companies. Moniepoint, for example, has increased its transaction monitoring team by five new hires since May 2024, including seasoned compliance professionals from OPay and Flutterwave. The fintech has also recruited six fraud and compliance staff members along with a senior team lead with a decade of experience in Nigeria’s banking sector, according to LinkedIn data and sources familiar with the hiring patterns.
Meanwhile, Kuda Bank has added three compliance analysts, a Nigerian Inter-Bank Settlement System compliance manager, and two members to its fraud prevention team. OPay bolstered its legal team by four new hires, and Palmpay added six compliance officers, including a senior manager with extensive experience at Union Bank.
A Shift in Regulatory Landscape
The regulatory overhaul for Nigerian fintechs began with a new CBN guideline issued in December 2023, which set stringent requirements for KYC, limited peer-to-peer cryptocurrency transactions, and expanded fraud monitoring requirements. The April 2024 ban underscored this shift, halting new account openings by several fintech companies and giving them a roadmap to regulatory compliance. This action stemmed from concerns over how easily customers could open accounts without thorough KYC processes, which regulators feared could be exploited for fraud.
Moniepoint CEO Tosin Eniolorunda highlighted these concerns, stating, “Customers can easily open Tier 3 accounts on fintech platforms in seconds,” which has drawn criticism and oversight from regulatory bodies, including Nigeria’s National Security Adviser (NSA).
Increased compliance staffing is expected to ease regulatory tensions and align with CBN’s push for robust compliance in the sector. “The central bank wants the fintechs to be more compliant, and they need more hands to make that happen,” a source familiar with the discussions between the fintechs and the central bank told TechCabal. This focus on compliance is not just about satisfying regulatory requirements but also a response to pressure from investors who want their portfolio companies to operate within legal boundaries to ensure sustainability and trustworthiness.
A New Era of Compliance for Nigerian Fintechs
The compliance and fraud monitoring expansions at Kuda, Moniepoint, OPay, and Palmpay indicate a significant change in the Nigerian fintech landscape. Although the increased hiring of compliance and fraud prevention professionals signals commitment, only time will reveal if these efforts can effectively curb fraud in Nigeria’s booming fintech industry. As the regulatory scrutiny grows, so too does the need for fintechs to find a balance between rapid user growth and adherence to financial regulations.