FairMoney Microfinance Bank is embedding regulatory compliance and consumer protection into the design and lifecycle of its financial products as Nigerian regulators intensify scrutiny of digital lenders and other financial technology operators.
Rather than assessing regulatory requirements after a product has been developed, FairMoney says its compliance, risk, legal and consumer-protection teams are involved from the beginning of the process.
The approach comes as the Central Bank of Nigeria (CBN) and the Federal Competition and Consumer Protection Commission (FCCPC) strengthen oversight of digital financial services.
The FCCPC’s Digital, Electronic, Online or Non-Traditional Consumer Lending Regulations 2025 have established new standards for digital consumer lending, with greater emphasis on transparency, consumer protection, data compliance and responsible lending practices.
James Edeh, head of compliance at FairMoney Microfinance Bank, said the company is seeking to balance commercial growth with regulatory obligations without compromising the interests of customers.
“Compliance is not just about what is at the back. There is also a lot of work that is going on to ensure that the customers are protected,” Edeh said.
According to Edeh, compliance officers are involved in translating regulatory requirements into practical rules that guide the development and delivery of digital financial products.
This means regulatory considerations begin at the product-design stage rather than after a service has been introduced to the market.
“If the business wants to onboard customers digitally, the compliance officer has to redesign and give them the requirements on how the customers will be able to onboard in the right way that is in tandem with what is obtainable in the regulatory environment,” he said.
The requirements include customer identification, Bank Verification Number (BVN) verification, National Identification Number (NIN) checks and other know-your-customer processes.
The model represents an increasingly important distinction in the digital-finance industry.
As financial products become more automated, a regulatory failure embedded in the technology or customer journey can potentially affect thousands of users before it is detected.
Embedding compliance controls into the system from the outset could therefore reduce regulatory, operational and reputational risks.
For FairMoney, which began operations in Nigeria in August 2021 as a digital lender and has since expanded into a technology-driven financial institution serving consumers, merchants and agents, the challenge is to maintain the speed and convenience associated with digital finance while meeting increasingly demanding regulatory standards. Lending remains a major part of its business.
The bank’s approach also places significant emphasis on whether customers actually understand the products they are using.
Edeh argued that simply publishing terms and conditions does not necessarily amount to transparency.
“Transparency does not just mean disclosure; it also means understanding,” he said.
The distinction is particularly important in a country with a large financially excluded population and millions of customers who may have limited experience with formal banking and digital credit products.
Fees, loan terms, repayment obligations and other product conditions must therefore be communicated in language customers can understand, rather than merely being disclosed to satisfy a formal requirement.
FairMoney’s digital model is designed to reach customers who may not have easy access to traditional bank branches, using smartphones and agent networks to facilitate account opening and access to financial services.
Complaints become a source of intelligence
FairMoney says it is using customer complaints not only as a service issue but also as a feedback mechanism for identifying weaknesses in products, agent operations and third-party relationships.
Edeh said complaints involving agents or external collection partners are reviewed, with customer-service calls recorded in real time to enable investigations where customers allege inappropriate conduct.
“If a customer says your agent was aggressive, we get to review that,” he said.
The recordings allow the bank to establish what happened and take action where an agent or third-party provider has breached its standards.
The approach highlights another challenge facing the digital-finance industry: companies can outsource parts of their operations, but regulatory and reputational risks cannot necessarily be outsourced with them.
As lenders rely on agents, collection partners, payment providers and technology companies, oversight of third parties is becoming an increasingly important component of compliance.
Data protection raises the stakes
Beyond lending practices, customer data has become another major area of regulatory focus.
Edeh said FairMoney’s approach begins with purpose limitation which includes collecting only the information necessary for legitimate business purposes.
The next challenge is ensuring that the information is securely stored, transmitted and accessed.
The bank has controls governing employee access to customer information, while data moving through its systems is encrypted, according to Edeh.
The controls also extend beyond FairMoney’s internal infrastructure.
The company works with external payment and technology providers, creating a wider network through which customer information may be processed.
Edeh said third-party providers are subject to contractual and security requirements, while the bank conducts periodic reviews, including data-protection audits and data protection impact assessments where required.
The growing dependence of financial institutions on external technology providers means that data security is no longer confined to a company’s own systems.
A weakness anywhere along the digital financial-services chain can expose customers and institutions to significant risk.
Regulation becomes part of the business model
For FairMoney, the wider argument is that compliance should not be treated simply as a cost of doing business.
Edeh described the function as finding a middle ground between commercial objectives and regulatory requirements while ensuring that consumer protection remains part of business decisions.
The bank said it monitors regulatory developments and engages with industry stakeholders to anticipate potential changes.
Compliance officers also periodically brief the board on regulatory developments and analyse emerging trends to prepare for possible new requirements.
That forward-looking approach is becoming increasingly relevant in Nigeria’s rapidly evolving digital-finance market.
The FCCPC has resumed implementation of its 2025 digital lending regulations and maintains a public register of approved digital lenders, increasing the pressure on operators to showcase compliance with consumer-protection and data requirements.
For FairMoney, regulation is therefore becoming embedded in the architecture of the business itself; from customer onboarding and loan disclosures to product development, agent conduct, data security and technology infrastructure.
