Fidelity Bank, a major Nigerian commercial bank, has recently implemented restrictions on fund transfers to several popular neobanks, including OPay, Palmpay, Kuda, and Moniepoint. This move is primarily attributed to growing concerns about lax Know Your Customer (KYC) processes at these fintech companies, which are believed to be contributing to a surge in fraudulent activities.
Sources familiar with the situation have confirmed that the restrictions were imposed to mitigate the risk of financial losses due to increased fraud incidents. Traditional banks, including Fidelity Bank, have expressed concerns about the adequacy of remote verification methods employed by neobanks, which often rely on third-party providers to collect and verify customer information.
While some neobanks have denied being affected by the restrictions, customer complaints and internal confirmations suggest otherwise. The affected fintech companies are now working to address the KYC concerns raised by Fidelity Bank and other traditional banks.
This development highlights the ongoing tension between traditional banking institutions and fintech startups in Nigeria. As fraudsters become increasingly sophisticated, banks are taking stricter measures to protect themselves and their customers. However, these measures could potentially hinder the growth of the fintech industry and limit consumer choices.
