The president, Risk Management Association of Nigeria (RIMAN) Dr. Ezekiel Oseni, has advised financial technology (Fintech) firms to always evaluate the security of third-party vendors to forestall data breach.
Oseni gave the advice at the maiden edition of the 2022 Annual Conference of the Finance and Business Online Publishers (FiBOP) held recently in Lagos under the theme ‘Harnessing Fintechs for economic growth and development.’
The RIMAN president who delivered a paper entitled ‘Hedging against Fintech risk in financial services delivery’ identified third party risk as a major pitfall Fintech companies have to void if they aim to deliver services effectively and efficiently.
He expressed the need for enforcing strong access reporting, auditing and third-party vendors monitoring as well as conducting compliance audits and checkups as important in checking third-party breaches.
He said Fintech has a vital role to play in accelerating recovery of the economy by facilitating loans and payments, supporting SMEs and driving financial inclusion.
He therefore charged the regulatory bodies to create compliance policies and internal controls, conduct compliance audits and checkups, implement training, being up to date with recent guidelines as well as keep abreast of technological developments that can impact or disrupt organisations.
Oseni identified some other risk mitigating factors to include but not limited to securing computers, servers and wireless networks use of data backdrops that include off-site or remote storage, regular update of software to the latest versions and the training of staff in IT policies and procedures.
He stated that the drive for innovation occasioned by the challenges of the external environment on organisations gave rise to the introduction of financial technology.
“The challenges posed by the external environments on organisations have put many organisations that want to remain relevant and deliver value to its stakeholders to make innovation constant factor.
“It takes a risk taker to be innovative. As risk managers we should be supportive of innovations and creativity in business processes, products and service delivery and more importantly customer satisfaction.
One of the areas that innovation has become very obvious in recent times is the financial industry with financial technology,” he added.
He further noted that the introduction of cash policy by the Central Bank of Nigeria (CBN) stimulated the emergence of Fintech as well as created the environment for it to thrive.
He added that the outbreak of COVID-19 pandemic in early 2020 and its attendant lock down brought Fintech to the fore as banks could not operate.
“The emergence of COVID-19 early 2020 with the attendant lock down as banks could not operate makes Fintech as the virtual banking where funds can be sourced, transferred and spent very handy.
“It became the way out for everyone during the lock down to reach out to people in financial needs across the world and to transact businesses,” Oseni said.