The Securities and Exchange Commission Nigeria (SEC) has cautioned fintech operators that while technology can expand access to investment opportunities, it also has the potential to magnify risks if not properly managed.
While speaking at the first biannual SEC Regulator–FinTech Clinic, Rabi Maidawa, fund authorisation officer at the commission, said technology-driven platforms do not eliminate risk in investment but can amplify it when systems are poorly designed.
“Technology does not eliminate risk in investment; it amplifies it. A single design flaw on a platform, such as a data integrity issue, can spread quickly across the investor ecosystem,” Maidawa said.
Regulators and industry stakeholders at the forum stressed the need for stronger compliance frameworks as digital finance continues to evolve across Nigeria’s financial ecosystem.
Muhammad Jiya, chief operating officer for emerging technologies and innovation at the Nigerian Financial Intelligence Unit (NFIU), noted that digital assets and technology-driven financial services are creating new channels for financial crime.
According to him, operators must ensure that compliance programmes are embedded within their platforms from the early stages of development.
“Digital assets and technology-driven financial services also present new actors for financial crime. As operators, compliance programmes should be embedded into your systems,” Jiya said.
Industry experts also advised fintech founders to engage regulators early when developing new products.
Nelson Ikeagu, a regulatory expert, said pre-launch engagement with regulators is essential for innovators whose products may not clearly fall within existing regulatory frameworks.
“Pre-launch dialogue is important for operators because it helps provide guidance on what regulators expect,” he said.
He added that startups developing innovative products that do not fit neatly into existing regulations, such as those overseen by the Nigerian Communications Commission (NCC) should consider applying for regulatory sandbox programmes to obtain guidance while testing their solutions.
“Operators that adopt higher compliance standards are better positioned to navigate the regulatory environment,” Ikeagu noted.
Ismaila Muhammad, an IT professional who spoke at the event, also advised fintech founders to treat their platforms as regulated entities and ensure they do not become conduits for illicit financial activity.
“You are still an entity even if you are a tech company. Ensure that money launderers do not infiltrate your business. Proper registration with the SEC and adherence to regulatory requirements are essential,” he said.
While delivering remarks on the commission’s regulatory approach to fintech, Jameelah Sheriff-Ayedun said the SEC was among the first Nigerian regulators to formally institutionalise collaboration with fintech companies.
According to her, the commission introduced a regulatory incubation programme to provide innovation-friendly supervision while maintaining market integrity.
“The regulatory incubation programme provides innovation-friendly supervision. The SEC has also played an active leadership role in the regulators’ forum,” she said.
She noted that between 2020 and 2022, the commission moved early to support emerging fintech models, including crowdfunding, robo-advisory services, tokenisation, and digital assets.
However, Sheriff-Ayedun acknowledged that several structural challenges remain in Nigeria’s fintech regulatory environment. These include complex multi-regulator oversight, overlapping mandates among agencies, and prolonged licensing timelines.
She also pointed to operational clarity gaps in areas such as digital assets and decentralised finance (DeFi).
Beyond regulation, she said the industry still faces significant market and capacity gaps, including shortages of skilled talent in compliance, cybersecurity, and artificial intelligence, as well as limited investor education and barriers to broader retail capital participation.
Other challenges include the limited depth of early-stage capital available to support fintech innovation in the country.
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