The financial sector is one of the most regulated in the world. They hold the key to the stability of an economy. The 2008 financial crisis in the US is a great example of how important financial institutions are to an economy.
Regulations serve as a safeguard, ensuring that financial institutions operate transparently, protect consumers, and mitigate systemic risks that could disrupt markets. Without regulatory oversight, unchecked practices could lead to financial crises, destabilising entire economies.
As fintech innovations reshape global finance, regulators’ jobs have become somewhat harder but all the more important. Fintechs, by design, improve the accessibility and efficiency of financial services; however, these improvements should not come at the cost of safety and trust in the country’s financial system.
While regulators like the Central Bank of Nigeria (CBN) and the Nigeria Securities and Exchange Commission (SEC) have done a good job of ensuring the stability of Nigeria’s financial system over the years, they have sometimes come at the cost of limiting innovation.
For instance, regulations by the CBN restricted the growth of mobile money operations in Nigeria for a long time.
Per this TechCabal article, about mobile money regulations, “Nigeria’s mobile money landscape is dominated by banks, technology, and financial services companies. Contrary to what is seen in Kenya and Ghana, telecom operators are not allowed to apply directly for mobile money licences and are instead restricted to the provision of network infrastructure for the use of mobile money operators.”
Regulations like this limited the impact mobile money could have had in Nigeria, especially regarding financial inclusion.
Similar restrictions have also stood in the way of crypto platforms that could ease cross-border transactions in Nigeria.
With the saying that innovation moves faster than regulation, this could always be the case for financial innovation in subsequent years, but at Zone, we are looking to change this.
On the surface, our solution is an advancement to payments in Nigeria. We leverage blockchain technology to make payments faster and safer.
However, a closer look at our solution shows that it eases financial regulation in addition to making payments faster and safer.
We have been described as the most innovative financial innovation since the creation of the Nigeria Inter-Bank Settlement System (NIBSS), and we have created a global standard for financial innovation.
Our network represents a major innovation in Nigeria’s financial ecosystem by streamlining the connection between financial institutions through a regulated blockchain network.
This blockchain-based approach offers a direct link between institutions. Unlike similar blockchain innovations that aim to render existing regulations and players useless, we enhance them.
For years, blockchain has been seen as a disruptor of traditional finance but for us blockchain is an enhancer. We have created a regulated blockchain network that brings the power of blockchain to existing institutions.
Within this network, these institutions become switches that can directly facilitate transactions between themselves without going through a third party. This is possible because we have a switching licence, which means these institutions are leveraging that licence through a regulated blockchain network.
One of our most notable achievements is the ability to improve regulatory oversight. By providing a transparent view of financial activities, the network gives regulators real-time access to data, simplifying compliance and reducing the risk of fraudulent activities.
This level of transparency is a game-changer for financial regulation in Nigeria, ensuring that institutions adhere to legal frameworks without unnecessary delays or bureaucratic roadblocks.
Looking ahead, we hope to shape the future of financial regulation in Nigeria. With our secure and transparent infrastructure and the potential to redefine how regulators interact with the financial industry, setting a precedent for other markets. This could
