Compliance as a Foundation for Trust in Tech-Enabled Banking
By James Edeh, Head of Compliance, FairMoney Microfinance Bank
For many banking customers, compliance is largely invisible. It is not what they see when a transfer is completed, a savings account is opened or a loan application is approved. Yet 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.
As technology reshapes financial services in Nigeria, this role is becoming more significant. Compliance can no longer be understood solely as an internal function concerned with meeting regulatory requirements. In a technology-enabled financial system, it is increasingly part of the architecture of consumer protection.
Nigeria’s progress in financial inclusion illustrates both the opportunity and the responsibility. According to EFInA’s 2023 Access to Financial Services Survey, formal financial inclusion rose from 56 per cent of Nigerian adults in 2020 to 64 per cent in 2023, although 26 per cent remained financially excluded. Technology can help broaden access to the formal financial system by making payments, savings and credit more accessible.
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. As financial services become faster and more digital, these expectations are likely to become more important, not less.
This is reflected in the continuing development of Nigeria’s consumer protection framework. Nigeria’s consumer protection landscape continues to evolve, including through developments in the regulation of digital and non-traditional consumer lending. These developments reflect increasing expectations around transparency, fairness, responsible conduct, data protection and consumer redress.
The broader direction is clear; financial innovation must develop alongside appropriate protections for those who use it. For fintechs and microfinance banks, this presents both an obligation and an opportunity. These institutions often seek to address longstanding challenges around access, convenience and speed. Targeted financial Technology can reduce barriers to participation in the financial system, but it also requires institutions to consider carefully how risks are managed as services scale.
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.
This requires compliance to be considered early in the development of products and processes, rather than at the point when a regulatory issue arises. Decisions about data, product design, lending, customer communication and complaints management all have consumer protection implications. A strong compliance culture helps institutions identify those implications and incorporate appropriate safeguards into the way they operate.
This is particularly relevant in tech-enabled lending. Access to credit remains an important component of financial inclusion. Technology can expand lenders’ ability to assess and serve a wider range of customers. But increased access must be accompanied by responsible conduct. Customers should be provided with clear, relevant and understandable information about the terms, conditions, applicable charges and other material features of the financial products they use. They should have confidence that their information will be treated appropriately and that, where concerns arise, there are credible channels through which those concerns can be addressed.
These principles are increasingly central to how we think about compliance at FairMoney Microfinance Bank. Our development as a technology-enabled microfinance bank reflects a wider shift taking place within Nigeria’s financial services sector. FairMoney Microfinance Bank is licensed and regulated by the Central Bank of Nigeria (CBN) and operates within a prudential framework designed to support the safety and soundness of the financial system.
Eligible deposits with FairMoney Microfinance Bank are insured by the Nigeria Deposit Insurance Corporation (NDIC) up to the applicable maximum coverage limit and subject to the terms and conditions of the NDIC deposit insurance scheme.
At the same time, our responsibilities extend beyond prudential regulation. Consumer protection must remain a practical consideration in the way financial services are delivered. This includes transparency, customer communication, data protection, responsible lending and effective complaint resolution, in line with applicable laws and regulatory requirements, including those issued by the Central Bank of Nigeria (CBN) and, where applicable, the Federal Competition and Consumer Protection Commission (FCCPC).
For a compliance function, this means moving beyond a narrow conception of regulatory adherence. The purpose of compliance is not simply to determine whether an institution has met a particular rule. 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.
The success of tech-enabled finance will depend not only on the quality of the technology behind it, but also on the quality of 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.
For FairMoney, compliance is therefore closely linked to the responsibility that comes with being entrusted with customers’ money, information and financial ambitions. 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. In an increasingly digital financial system, protecting that trust must remain a central responsibility of the industry.
