The President Risk Management Association of Nigeria (RIMAN) Dr. Ezekiel Oseni has identified third party risk as the major challenge facing Fintech companies must guard against if they must deliver quality services.
Oseni made said this at the 2022 Annual Conference of the Finance and Business Online Publishers (FiBOP), with the theme,” Harnessing Fintechs for Economic Growth and Development” ‘in Lagos advised Fintechs to always evaluate the security of third-party vendors, insisting that all it takes is one vendor to cause a third-party data breach.
Delivering a lecture titled, “Hedging Against Fintech Risk In Financial Services Delivery”, Oseni said there is the need to enforce strong access reporting, auditing and third-party vendors monitoring as well as conducting compliance audits and checkups as important in checking third-party breaches and to ensure vendors are well experienced and certified by various international standards.
He posited that Fintechs have a vital role to play in accelerating the recovery of the economy by facilitating loans and payments, supporting SMEs and driving Financial inclusion, charged regulatory bodies on creating compliance policies and internal controls, conducting compliance audits and checkups, implementing training and stay updated with recent guidelines and also keep abreast of technological development that can impact or disrupt organisations.
He listed other risk mitigating factors to include: securing computers, servers and wireless networks, use of data backdrops that include off-site or remote storage, regular update of software to the latest versions and the training of staff in IT policies and procedures.
He contended that the drive for innovation occasioned by the challenges of the external environment on organisations gave rise to the introduction of Financial technology.
According to him, “The challenges posed by the external environments of organisations have put many organisations that want to remain relevant and deliver value to its stakeholders to make innovation a constant factor.”
He continued, “It takes a risk taker to be innovative. As risk managers we should be supportive of innovations
and creativity in business processes, products and service delivery and more importantly customer satisfaction. One of the areas that innovation has become very obvious in recent times is the financial industry with financial technology (Fintech),’.
He further noted that the introduction of the cash policy of the Central Bank of Nigeria(CBN), was a stimulator for the emergence of Fintech as well as created the environment for it to thrive and was further fueled by the outbreak of the COVID-19 pandemic.
“The emergence of COVID-19 early 2020 with the attendant lockdown as banks could not operate make Fintech as the virtual banking where funds can be sourced, transferred and spent very handy. It became the way out for everyone during the lockdown to reach out to people in financial needs across the world and to transact businesses.”
Other major risks listed by the RIMAN President’ are fraud and money laundering risk, lack of funding or underfunding, competitive market place and cybersecurity risk amongst others.