FinTech offers great potential, but poses regulatory risks – SEC

The Director General of the Securities and Exchange Commission, Dr Emomotimi Agama, has said financial technology offers great potential, but it poses significant regulatory risks as large amounts of investor data could be misused without consent.

Agama added that the systems are vulnerable to cyberattacks with potentially severe consequences.

He stated this while delivering a keynote address at the FintechNGR conference with the theme ‘Positioning Africa’s Fintech Ecosystem to Accelerate Inclusive Growth’ which was held in Lagos on Tuesday.

Agama said fintech, particularly in Africa, offers transformative potential to address long-standing challenges such as financial exclusion, limited access to credit, and the inefficiencies of traditional financial services.

He said the SEC believes that effective regulation is not just about enforcement; it is about creating an enabling environment where innovation can thrive while protecting the interests of all stakeholders.

He said by leveraging innovative technologies such as mobile payments, peer-to-peer lending, and digital currencies, fintech platforms are driving financial inclusion at an unprecedented scale.

“This allows individuals, small businesses and underserved populations to access the financial system, thereby contributing to broader economic participation and growth,” the DG said.

The SEC DG also said there is a significant opportunity for fintechs to contribute to economic growth in Nigeria as services have contributed an average of 56% to the nation’s GDP since 2023 while financial services have recorded growth rates of 30% within the same period.

However, he explained that while fintech offers great potential, it poses significant regulatory risks as large amounts of investor data could be misused without consent.

“Additionally, companies using fintech to raise public funds without regulatory approval expose investors to fraud, undermining the commission’s investor protection mandate.”