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Nigeria’s fintech ecosystem remains sharply divided on the country’s regulatory environment, with operators evenly split between those who see it as innovation-friendly and those who regard it as a constraint, according to a new survey released by the Central Bank of Nigeria (CBN).
The findings are contained in the CBN Fintech Report 2025, published on Monday, and drawn from a nationwide ecosystem survey, a closed-door stakeholder workshop held in June 2025, and discussions at the October 2025 CBN Fintech Roundtable.
According to the apex bank, the divide reflects lingering challenges around licensing timelines, regulatory clarity, and uneven enforcement across agencies, despite increased dialogue between regulators and fintech operators.
“Exactly half of respondents view the regulatory environment as enabling, while the other 50 per cent find it restrictive,” the report noted, adding that the divergence is largely driven by perceived licensing delays, unclear guidance, and inconsistent application of rules.
Regulatory friction is also taking a measurable toll on innovation. About 62.5 per cent of surveyed firms said approval timelines significantly delay product launches, while more than one-third reported that it takes over 12 months to bring a new product to market, largely due to compliance-related bottlenecks.
Compliance costs emerged as an even more pressing concern. Nearly 87.5 per cent of fintechs said spending on regulatory and risk-management requirements materially limits their ability to innovate, particularly costs associated with anti-money laundering controls, cybersecurity, and fraud prevention.
While respondents acknowledged the importance of these safeguards, many pointed to fragmented supervision and duplicative reporting requirements as factors that inflate costs, especially for smaller and fast-scaling firms.
Despite these challenges, fintech operators are not calling for deregulation. Instead, the report found strong support for deeper, more predictable engagement with regulators. About 75 per cent of respondents advocated regular, structured engagement forums, while all surveyed firms expressed willingness to collaborate through regulatory sandboxes, policy pilots, or working groups—signalling a shift toward high-trust, institutionalised engagement.
Regional expansion remains a key growth objective, with around 62.5 per cent of firms already operating in, or planning to expand into, other African markets. However, respondents warned that fragmented licensing regimes across countries increase costs and slow cross-border growth.
An equal proportion of respondents supported the idea of regulatory passporting, which would allow licences issued in Nigeria to be recognised in peer markets under agreed frameworks. Ghana, Kenya, South Africa, Uganda, and Senegal were identified as potential pilot countries.
While fintechs broadly praised Nigeria’s real-time payments infrastructure—widely regarded as one of the most advanced in Africa—they highlighted structural gaps that limit scale and inclusion. These include limited access to affordable digital identity verification, incomplete data-sharing frameworks, and uneven broadband penetration.
The report also cited the December “Detty December” period as a system stress test, noting spikes in transaction failures and service disruptions during peak demand.
On cryptocurrency, respondents recognised its potential to support cheaper cross-border payments and financial inclusion but cautioned against blanket restrictions. Instead, they called for risk-based regulation, clearer rules on permitted activities, and stronger international coordination.
Access to capital remains another challenge. About 37.5 per cent of firms cited macroeconomic volatility, currency risk, and delays in foreign investment approvals as key constraints. In response, 87.5 per cent supported the creation of fintech-specific growth funds or credit-guarantee schemes, ideally through public-private partnerships.
The report further showed that risk management concerns are shaping technology adoption across the sector. About 87.5 per cent of Nigerian fintechs now use artificial intelligence for fraud detection, making it the most common AI application. AI-powered chatbots are used by 62.5 per cent of firms for customer service, while 37.5 per cent apply AI to credit scoring, risk modelling, onboarding, and know-your-customer processes.
According to the CBN, this reflects both the scale of fraud risks in Nigeria’s rapidly expanding digital finance ecosystem and the growing reliance on data-driven tools as fintech services deepen across payments, lending, and remittances.
The apex bank cautioned that although Nigeria processed close to 11 billion real-time payment transactions in 2024, rapid digitisation has expanded the system’s risk surface. Fraud, weak controls at some fast-growing firms, and cross-border financial crime remain concerns, even as Nigeria has strengthened AML supervision and exited the Financial Action Task Force (FATF) grey list.
Despite these risks, fintechs showed strong interest in responsible AI deployment. About 62.5 per cent said they are keen to participate in an AI-focused regulatory sandbox, while 75 per cent prioritised ethical and transparent use of AI in credit and risk decisions.
In the foreword to the report, CBN Governor Olayemi Cardoso said the bank has witnessed “first-hand the transformative power of digital finance to broaden economic participation, create meaningful employment, and improve the lives of millions of Nigerians.”
He stressed that innovation must thrive under prudent oversight, noting that while fintech growth is critical, maintaining financial system integrity, strong governance, consumer protection, and effective risk management remains essential.
According to Cardoso, Nigeria’s objective is to strike the right balance—encouraging innovation that drives growth while safeguarding stability and public confidence—positioning the country as a leading fintech hub in Africa and beyond.
In a statement issued alongside the report, the CBN said the findings underscore Nigeria’s leadership in real-time payments and frame fintech innovation as a complementary force within the financial system, expanding access and efficiency while preserving resilience.
The bank added that the report offers practical policy guidance to improve regulatory coordination, strengthen supervision, and support responsible innovation, serving as a shared reference point as Nigeria consolidates its role in the regional and global fintech landscape.
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