By Charles Abuede
- Says aim is to encourage financial inclusion and improve customer experience
The Central Bank of Nigeria (CBN), with a view to increasing the potential for innovative business models that move forward financial inclusion in Nigeria, has outlined the regulatory framework for the operation of the Regulatory Sandbox for the Nigerian payments system.
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The CBN is seeking to promote effective competition, the embrace of new technology, encourage financial inclusion and improve customer experience, with a view to engendering public confidence in the country’s financial system.
The apex bank, in an issued framework released and posted to its website on Wednesday, and published by its payments system department, announced that those financial institutions with FinTech initiatives and other companies such as s technology and telecom companies intending to test an innovative payments product or service industry deemed acceptable by the CBN are invited to apply to do so.
It also revealed that the move is in view of the increasing consumer appetite for payment solutions and emerging disruptive technology in the financial services space, thus, deeming it pertinent to ensure that there are new and more flexible ways of engaging with the industry.
According to the framework from the CBN, “the use of a Regulatory Sandbox is a formal process for firms to conduct live tests of new, innovative products, services, delivery channels, or business models in a controlled environment, with regulatory oversight, subject to appropriate conditions and safeguards. This would enable the bank [CBN] to stay abreast of innovations while promoting a safe, reliable and efficient payments system to foster innovation without compromising on the delivery of its mandate.”
The CBN also encouraged innovators and participants to leverage on sandbox of other regulators to the extent of the segment of their products that falls within the jurisdiction of the other regulators. Further, the number of innovators to be accepted into a cohort is a function of the Central Bank’s resource capacity to support innovators.
The bank further stated that the initiative will help to increase competition, widen consumers’ choice and lower costs; ensure appropriate consumer protection safeguards in innovative products; clearly define the roles and responsibilities of stakeholders and the operations of the Sandbox for the Nigerian Payments System industry.
Also, it will ensure adequate provisions in regulations to create an enabling environment for innovation without compromising on safety for consumers and the overall payments system; and provide an avenue for regulatory engagement with FinTech firms in the payment space, while contributing to economic growth.