For millions of Nigerians, financial services now begin with a phone. Transfers, payments, savings and other services can be completed through fintech applications without visiting a bank branch.

Behind it is a complicated network of cloud providers, telecommunications companies, payment processors, data centres and other technology firms. A disruption at any critical point can prevent customers from accessing their money or completing transactions.

That dependence is raising questions about whether financial regulation is keeping pace with the technology supporting Nigeria’s digital financial system.

The infrastructure customers do not see

The Director General of the National Information Technology Development Agency, Kashifu Inuwa, recently urged the Central Bank of Nigeria to expand its oversight of technology companies and infrastructure supporting financial institutions.

Speaking at the 15th Retreat of the CBN Committee of Departmental Directors in Lagos, Inuwa said financial stability increasingly depended on resilient technology and Nigeria’s capacity for digital self-determination.

A financial company could have its own systems operating normally but still be unable to process transactions if an external cloud provider experiences an outage, a telecommunications network goes down, or another critical technology partner becomes unavailable.

The dependencies can extend further. A fintech may rely on a technology company that itself depends on another provider for part of its infrastructure.

Inuwa described these as third-party and fourth-party dependencies, highlighting the difficulty of assessing risks beyond the institution directly regulated by financial authorities.

“We need to be ahead of the institutions we regulate,” he said. “We cannot wait for regulated institutions to submit returns before we analyse and understand what is happening.”

For customers, the distinction between these companies does not matter when a service fails. A transfer that cannot be completed is simply a failed transfer.

Regulation is moving beyond the fintech itself

The CBN has already introduced measures aimed at making the payments system more resilient. The central bank directed payment acquirers, processors and terminal service providers to maintain dual connections to the Nigeria Inter Bank Settlement System and Unified Payment Services, reducing dependence on a single transaction channel.

The regulator has also increased its use of technology in financial supervision. In March, it issued standards for automated systems used by financial institutions to detect, analyse and report suspicious transactions.

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But the technology ecosystem behind financial services is broader than the institutions under the CBN’s direct supervision.

Cloud computing illustrates the challenge. Financial companies can use cloud infrastructure to scale their operations without building all their computing capacity themselves. That can make it easier for fintechs to expand, but it also means part of their operational resilience depends on external infrastructure.

Nigeria is already moving to strengthen oversight of its cloud sector. NITDA has established regulatory instruments for cloud computing and plans to begin registration, technical assessment and certification of providers through its national digital regulatory platform in October.

This creates an increasingly important connection between technology regulation and financial regulation. If a provider becomes critical to several financial institutions, a disruption could have consequences beyond one company.

The next layer of risk

Artificial intelligence is adding another dimension to the technology challenge. Financial institutions are increasingly using AI for fraud detection, cybersecurity and automated processes. While these tools can strengthen financial services, they also introduce vulnerabilities that could be exploited by attackers.

For regulators, monitoring the financial system increasingly involves understanding the technologies on which it runs.

For fintech companies, the implications are equally significant. Companies need to understand the resilience of their technology suppliers, identify critical dependencies and have alternatives when important systems become unavailable.

This matters as fintechs become more deeply integrated into everyday economic activity. Businesses depend on digital payment platforms to receive money, individuals use fintech applications to transfer funds, and merchants increasingly rely on electronic payments.

The cost of a technology failure therefore extends beyond an app going offline. It can interrupt payments, delay business transactions and undermine customer confidence.

The business risk behind digital convenience

Nigeria’s fintech industry has built its appeal around convenience. Customers can open accounts, transfer money and make payments without interacting with a traditional bank branch. But that convenience depends on infrastructure that customers rarely consider until something goes wrong.

Technology resilience has therefore become a business issue as much as a technical one. A fintech that relies heavily on a single provider may have a vulnerability that is invisible in its customer-facing product.

The question is no longer only whether a fintech is financially sound or compliant with financial regulations. It is also whether the technology ecosystem supporting it can withstand outages, cyberattacks and failures at critical third-party providers.

As Nigeria’s financial system becomes more digital, the companies providing its infrastructure are becoming part of its stability equation. A fintech may own the application on a customer’s phone, but its reliability ultimately depends on the technology network behind it.

Cynthia Nwanonyiri