In Nigeria’s evolving fintech industry, balancing innovation with regulatory compliance is a delicate balancing act. Kuda, one of Nigeria’s leading fintech companies, has had to navigate these challenges firsthand. In an exclusive interview with Techpoint Africa, Musty Mustapha, CTO and Co-founder of Kuda, shared valuable insights into how the company is managing this balance and what it means for the future of fintech in Nigeria.
Nigeria’s fintech sector has experienced remarkable growth in recent years, with companies like Kuda, Paystack, and Flutterwave leading the charge. However, this growth has also attracted increased regulatory scrutiny. In April 2024, the Central Bank of Nigeria (CBN) temporarily halted new customer onboarding for several fintechs, including Kuda, citing concerns over fraud and cyber attacks.
Kuda’s proactive approach to regulation has been instrumental in navigating these challenges. By viewing regulation as a framework that enhances trust and stability in the financial system, rather than just a compliance issue, Kuda has established an internal compliance program that ensures adherence to existing and new regulations. This forward-thinking approach proved essential when the CBN directed fintechs to pause new customer onboarding.
To address the CBN’s concerns, Kuda took immediate steps to enhance its Know Your Customer (KYC) processes and data protection measures. This included a thorough audit of existing procedures and the implementation of more rigorous customer verification protocols. Kuda also strengthened its data protection protocols, implementing regular monitoring and security audits to ensure there are no lapses.
One of the biggest challenges Kuda faced was balancing regulatory compliance with customer satisfaction. To minimize disruption, Kuda rolled out the verification process in phases and collaborated with address verification experts to ensure a smooth experience. By leveraging technology, Kuda allowed customers to complete most of the verification steps through the Kuda app.
Looking forward, Kuda is committed to innovation and expansion. The company is planning new features and services aimed at enhancing customer experience and promoting financial inclusion. Kuda is also pursuing partnerships with key industry players to broaden its service offerings and geographical reach.
Kuda’s approach to navigating the challenges of innovation and compliance offers a model of how companies can thrive by viewing regulation as a facilitator rather than a barrier. As Nigeria’s fintech sector continues to grow, Kuda’s experience underscores the importance of balancing regulatory requirements with the agility and creativity that drive technological advancement.
Kuda’s experience navigating Nigeria’s fintech regulatory landscape offers valuable lessons for other companies in the industry. By prioritizing regulation, understanding local customer needs, and leveraging technology, fintechs can thrive in a rapidly evolving industry. As Kuda continues to innovate and expand, its commitment to regulatory compliance will remain a key driver of its success.
