Regulating Fintech for Financial Stability in Nigeria

Balancing Cybersecurity Risks and Financial Inclusion

Abstract

Concerns about cybersecurity vulnerabilities, regulatory interventions, consumer confidence, systemic resilience, and financial inclusion have been amplified by the heightening reliance on financial technology (FinTech) firms in Nigeria. Given the need to examine the interaction among these variables to know their nature, reduce attacks and preserve customer confidence in digital financial services. This study analysed 248 responses of fintech users, regulatory bodies, and industry experts through a structured survey, using a stratified random sampling. The empirical analysis was carried out using the Structural Equation Modelling (SEM). To analyse the fundamental constructs of cybersecurity threats, regulatory measures, consumer confidence, systemic resilience, and financial inclusion are treated as the latent variables. Findings revealed that cybersecurity threats significantly affect regulatory measures, stressing the fact that heightened vulnerabilities catalysed the need for regulatory actions.  The essential role in protecting the financial markets is highlighted as regulatory measures exert a positive effect on consumer confidence and systemic resilience. On the other hand, cybersecurity threats adversely impact financial inclusion. Furthermore, regulatory interventions moderate the connection between cybersecurity threat and financial inclusion indicating that while regulations enhance security, they may unintentionally impose obstacles to financial inclusion. In conclusion, this research offers new perspectives on the existing literature on FinTech regulation, financial inclusion and systemic resilience. It suggests policy aimed at integrating cybersecurity enforcement with financial inclusion. Adaptable regulatory framework is emphasised in the results, such that security threats are addressed effectively while ensuring