A Guide for Financial Stakeholders to Navigate Regulatory and Compliance in the Banking Industry 

Since the nature of the banking industry is susceptible to innovations and new regulatory compliance, it is expedient for financial stakeholders to be aware of some of the banking regulatory compliance that can help them manage potential risks and unforeseen irrevocable damages.

With technological innovations like artificial intelligence, open and personalised banking and cybersecurity, financial stakeholders, over the last couple of years have experienced more transparent, data-driven and accessible banking operations that save costs and time. 

According to a survey by Statista, 85% of people attested that they have never been victims of bank cards or online banking fraud ─ thanks to the role of banking regulations and compliance.

Source: Statista

Therefore, to sustain a lasting financial system while protecting customers from criminal activities and other risks, financial stakeholders need to comply with the regulations of the banking industry.

The Nigerian banking regulation, for instance, is a guide that provides financial stakeholders with concrete information about the supervision and governance of banks, regulatory bodies, the role of licensing, and other international banking standards, as well as current banking trends. One such trend is the Banks and Other Financial Institutions Act (BOFIA 2020) legal framework for the regulations of banks in Nigeria.

The Regulatory and Compliance Framework for Financial Stakeholders in Nigeria

Before we delve into some of the cannot-do-without regulatory banking practices, here’s an overview of what the banking regulatory framework in Nigeria looks like.

• The primary regulatory authority for the banking industry is the Central Bank of Nigeria (CBN). The CBN is responsible for implementing and regulating national and foreign financial policies.
• The Security and Exchange Commission (SEC) takes care of the capital market.
• The Compliance and Allied Matters Act (CAMA) bears the responsibility for the regulation of companies.
• Nigerian Deposit Insurance Corporation (NDIC) is saddled with the role of issuing all deposit liabilities of licensed banks.
• The Foreign Exchange Monitoring and Miscellaneous Provisions Act provides the regulatory framework for foreign exchange transactions in Nigeria.
• The Investment and Securities Act (ISA) oversees the activities of investment institutions, including mutual funds, asset management companies and security dealers.

Some Practices that Can Help Financial Stakeholders Navigate Regulatory Compliance in the Banking Industry

1. A compliance culture has to be established in the organisation, whereby senior management lead by example in upholding all the compliance regulations of the company’s operations.
2. Creating a robust structure that identifies and helps prevent non-compliance issues and a disciplinary body for offenders. This internal control system is also responsible for the internal audits and assessments of the organisation.
3. Constant education and training of all members of staff, keeping them informed about all the compliance practices. This also ensures a compliance-conscious work environment.
4. Engaging with external control systems that bring in their expertise in auditing and assessing the organisation’s compliance practices; thereby identifying the areas for improvement.
5. Staying informed with modern trends and changes in compliance policies and actively monitoring the changes to avoid the breach of compliance.

Final thoughts …

Perhaps the only challenge of the regulatory compliance of the Nigerian banking industry is the dynamics associated with it, not to mention that the banking sector operates within a highly regulated environment. However, with strict adherence to banking regulatory compliance, stakeholders will not only discover evolving strategies to manage risks, but also achieve the organisation’s objectives while gaining relevance in the banking sector.