Joy Agwunobi
As Nigeria’s fintech ecosystem continues its rapid expansion, fraud risk has become the defining force shaping how artificial intelligence is deployed across the sector, according to new findings from the Central Bank of Nigeria (CBN).
Data from the CBN’s Fintech Report 2025 show that nearly nine out of every ten fintech companies in the country now rely on artificial intelligence primarily for fraud detection. Specifically, 87.5 percent of surveyed firms identified fraud prevention as their main AI use case, highlighting the growing security pressures that accompany Nigeria’s accelerating shift toward digital finance.
Released under the CBN’s Policy Insight Series, the report draws from a nationwide fintech ecosystem survey, insights gathered during a closed-door stakeholder workshop in June 2025, and deliberations from the CBN Fintech Roundtable held in October 2025. Taken together, the findings suggest that while Nigerian fintechs are increasingly sophisticated in their use of advanced technology, AI adoption is being driven more by defensive necessity than by competitive experimentation.
According to the report, the country processed close to 11 billion real-time payment transactions in 2024, more than double the volume recorded just two years earlier. This places Nigeria among the most active instant payment markets globally, reflecting both the success of digital finance adoption and the depth of consumer reliance on electronic channels.
“AI is widely adopted in Nigerian fintech, primarily for risk management and operational efficiency. Fraud detection” is the most common use case by a significant margin, employed by 87.5 percent of companies. This underscores the severity of the fraud challenge, which was described in the closed-door stakeholder workshop as a “big issue in the industry,” the report noted.
Within this broader context, fraud detection stands out as the most dominant AI use case, far outpacing other areas such as customer engagement or credit decision-making. While 62.5 percent of respondents reported using AI-driven chatbots for customer service, and 37.5 percent each apply AI to credit scoring, risk modelling, and customer onboarding or know-your-customer (KYC) processes, these functions remain secondary to security-focused deployments.
The CBN noted that this pattern reflects the realities of operating in a high-volume, fast-moving digital payments environment, where even small vulnerabilities can be exploited at scale. Although Nigeria has strengthened its anti-money laundering supervision, tightened KYC standards, and successfully exited the Financial Action Task Force (FATF) grey list, regulators warned that rapid digitisation continues to expand the financial system’s risk surface.
Despite the heavy emphasis on fraud control, fintech operators showed a strong appetite to expand AI use into other areas, provided there is clearer regulatory guidance. About 62.5 percent of surveyed firms said they are “very interested” in participating in an AI-focused regulatory sandbox, viewing it as a pathway to test new solutions while managing compliance risks.
Looking ahead, ethical considerations feature prominently in industry priorities. Three-quarters of respondents identified the ethical and transparent use of AI in credit and risk decisions as a key concern, alongside the need to ensure fair and inclusive access to AI tools and data. These priorities reflect growing awareness of the social and economic implications of algorithm-driven financial services, particularly in a country where access to credit and digital identity remains uneven.
However, the report also highlights significant constraints limiting deeper AI deployment across the sector. Limited access to specialised technical talent and a lack of regulatory clarity were each cited by 37.5 percent of respondents as major obstacles. In addition, half of the firms surveyed said that access to high-quality data or robust infrastructure would be the most critical support needed to scale AI use effectively.
Beyond artificial intelligence, the survey reveals broader structural pressures facing Nigeria’s fintech ecosystem. Regulatory and risk compliance costs remain a major concern, with 87.5 percent of respondents saying these costs significantly affect their ability to innovate. At the same time, 62.5 percent reported that regulatory timelines materially delay product launches, while more than one-third said it takes over 12 months to bring a new product to market due to approval and compliance bottlenecks.
Perceptions of the regulatory environment remain evenly split. Half of the respondents described it as enabling, while the other half viewed it as restrictive, citing delays, unclear guidance, and inconsistent application of rules across the sector. This divide suggests that while regulatory engagement has improved, gaps remain in aligning oversight processes with the pace of fintech innovation.
Despite these frictions, the report points to strong willingness among fintech firms to engage more closely with regulators. All respondents expressed interest in participating in policy roundtables, innovation pilots, and sandbox environments, reflecting a shared understanding that proactive collaboration is essential for building a secure, inclusive, and resilient fintech future.
According to the CBN, these insights are already shaping its policy priorities. The apex bank said it is focusing on innovation-friendly regulation, expanded use of supervisory technology, the development of shared compliance utilities, and deeper collaboration with industry players on AI governance, fraud intelligence, and digital identity infrastructure.
