The Securities and Exchange Commission Nigeria has warned fintech operators that technology, while expanding access to investment opportunities, can also magnify risks if not properly managed.

This caution came during the first biannual SEC Regulator–FinTech Clinic.

Rabi Maidawa, fund authorisation officer at the commission, addressed the event.

She explained that technology-driven platforms do not remove investment risks but can make them worse when systems are poorly designed.

“Technology does not eliminate risk in investment; it amplifies it. A single design flaw on a platform, such as a data integrity issue, can spread quickly across the investor ecosystem,” Maidawa said.

Participants, including regulators and industry stakeholders, emphasised the importance of stronger compliance frameworks as digital finance grows in Nigeria’s financial ecosystem.

Muhammad Jiya, chief operating officer for emerging technologies and innovation at the Nigerian Financial Intelligence Unit (NFIU), highlighted new risks.

He pointed out that digital assets and technology-driven financial services are opening fresh channels for financial crime.

According to him, operators must build compliance programmes into their platforms from the early development stages.

“Digital assets and technology-driven financial services also present new actors for financial crime. As operators, compliance programmes should be embedded into your systems,” Jiya said.

Industry experts recommended that fintech founders consult regulators early during product development.

Nelson Ikeagu, a regulatory expert, stressed the value of pre-launch engagement.

He said this is especially crucial for innovators whose products do not fit clearly into existing regulatory frameworks.

“Pre-launch dialogue is important for operators because it helps provide guidance on what regulators expect,” he said.

He added that startups creating innovative products outside current regulations, such as those under the Nigerian Communications Commission (NCC), should consider regulatory sandbox programmes.

These programmes offer guidance while allowing testing of solutions.

“Operators that adopt higher compliance standards are better positioned to navigate the regulatory environment,” Ikeagu noted.

Ismaila Muhammad, an IT professional at the event, urged fintech founders to view their platforms as regulated entities.

He advised them to prevent their systems from becoming channels for illicit financial flows.

“You are still an entity even if you are a tech company. Ensure that money launderers do not infiltrate your business. Proper registration with the SEC and adherence to regulatory requirements are essential,” he said.

Jameelah Sheriff-Ayedun spoke on the SEC’s approach to fintech regulation.

She said the commission was one of the first Nigerian regulators to formally establish collaboration with fintech companies.

She highlighted the introduction of a regulatory incubation programme.

This provides innovation-friendly supervision while protecting market integrity.

“The regulatory incubation programme provides innovation-friendly supervision. The SEC has also played an active leadership role in the regulators’ forum,” she said.

She noted that from 2020 to 2022, the commission supported emerging fintech models early.

These included crowdfunding, robo-advisory services, tokenisation, and digital assets.

However, Sheriff-Ayedun acknowledged ongoing structural challenges in Nigeria’s fintech regulatory landscape.

These include complex multi-regulator oversight, overlapping agency mandates, and lengthy licensing processes.

She also mentioned gaps in operational clarity for digital assets and decentralised finance (DeFi).

Beyond regulation, she identified market and capacity challenges.

These encompass shortages of skilled talent in compliance, cybersecurity, and artificial intelligence.

Additional issues include limited investor education and obstacles to wider retail capital participation.

Other challenges involve the limited availability of early-stage capital to fuel fintech innovation in the country.