As the banking sector continues to witness the proliferation of fintechs and the astronomical growth in their operations and contributions to payment services, digital lending and e-commerce, the Central Bank of Nigeria has stepped in to align their growth and operational expansion with regulatory compliance and oversight.
To this end, the apex earlier in the week announced that the licenses of selected major FinTechs and Microfinance Banks (MFBs) with nationwide operations will be upgraded to national status. The Director of the Other Financial Institutions Supervision Department (OFISD) at the CBN, Yemi Solaja, announced the development in Lagos.
The elevation of fintechs and MFBs to national status aims to synergise licensing requirements with their actual operational structure, as their services now span across Nigeria, ensuring proper regulatory oversight.
Solaja, who made the disclosure during the just concluded annual conference of the Committee of Heads of Banks’ Operations (CHBOs) in Lagos, implored Commercial Banks and Fintechs to work together to address the challenges of cash outside formal banking channels, and the adoption of “Digital-First” banking operations.
Solaja stated that the CBN observed a growing discrepancy between the limited licences held by some FinTechs and their actual nationwide presence, adding that the decision of many of the digital lenders and payment service banks to expand their operations beyond the geographical limits their original licences permit, prompted the regulators to officially update their licences to reflect national operational status.
Under the updated regulatory framework, major players including Moniepoint Microfinance Bank, OPay, Kuda Bank and other fintechs now hold national licences, granting them approval to operate across Nigeria rather than within restricted regions. It is pertinent to note that despite the upgrade in geographical reach and operational liberty, fintechs and MFBs are still largely distinct from conventional commercial banks in scope and operations. The upgrade does not make them deposit money in banks and is still limited to services permitted under their licence categories.
Here is what CBN’s National Licence Upgrade means for fintechs, MFBs and their customers
1. Nationwide operations are now ratified
The national licence effectively removes geographical limitations and now allows fintechs and microfinance banks to operate legally across state lines, removing previous regional or state-level bottlenecks.
2. Stronger regulatory oversight
The licence upgrade closes a regulatory loophole by bringing fast-growing fintechs fully under CBN control, with stricter and closer monitoring of operations nationwide.
3. Recapitalisation and higher compliance standards
National microfinance banks must now maintain a minimum capital base of about ₦5 billion, alongside stricter reporting, governance and risk-management requirements
4. Physical presence is mandatory
Licensed institutions are required to establish physical branches or service centres in key locations, improving access for customers who need in-person support.
5. Improved consumer protection and dispute resolution
Expanded oversight and physical outlets are expected to enhance complaint handling, transaction reversals and customer redress mechanisms.
6. Agent banking networks will expand
Approval of national operations allows firms to build agent networks across Nigeria, increasing access to cash-in, cash-out and payment services, especially in farflung underserved areas.
7. Boost for financial inclusion and rural economies
The move will also boost, enhance and quicken the materialisation of the CBN’s cashless and financial inclusion goal, improving access to digital payments, savings and credit for rural communities and informal workers.
8. Rising operational costs for affected fintechs and MFBs
The affected digital lenders and payment service banks are expected to incur more operational and overhead costs. Maintaining nationwide infrastructure, compliance teams and physical outlets is expected to increase operating expenses for affected firms.
9. Pressure on smaller fintechs
Higher capital demands and compliance requirements may put additional burden on smaller players, potentially leading to mergers, acquisition or market consolidation.
10. Greater focus on data protection and cybersecurity
As operations scale nationally, regulators are expected to intensify scrutiny of data privacy, cybersecurity and customer information protection.
11. Increased competition for traditional banks
Commercial banks may face stronger competition in retail payments and SME services, particularly where fintech agents are more accessible than bank branches.
12. Stricter penalties for regulatory breaches
National licence holders face tougher sanctions for violations, including fines, operational restrictions or licence withdrawal.
14. Higher transparency expectations
The CBN will require more frequent disclosures, audits and performance reports to monitor financial stability risks.
15. Potential boost to investor confidence
National regulatory approval may strengthen investor trust in Nigeria’s fintech sector and attract additional local and foreign investment