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Improvement in deployment of technology poses fresh challenges to banks, fintech, says Nova Merchant Bank chief

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By Samuel Bankole

The emerging deployment of technology in bridging the gap in the financial services industry has posed fresh challenges to auditing in banks and the fintech industry across the globe, according to the chief executive officer of Nova Merchant Bank Limited, Nath Ude.

Ude, who spoke at the quarterly general meeting of the Association of Chief Audit Executives of Banks in Nigeria (ACAEBIN) in Lagos, noted that financial industry auditors should take cognizance of the rapid deployment of technology in financial transactions if they must stay atop of their game.

He said; “The exposures to financial loss and data compromise in the digital space is a significant concern that requires auditors who not only understand internal business processes but also have the skills base to understand the digital processes and exposures the Bank faces.

“The anonymity that digitalization brings – remote account opening processes, use of robots by tech-savvy individuals, groups and entities to simplify processes (or impersonate actual humans), single individuals creating multiple accounts either of their own making or by impersonating existing individuals – is an avenue for revenue leakage and reputational damage for Banks.

Ude who was appointed to the governing council of the Chartered Institute of Bankers (CIBN) on Thursday said Auditors need to think along such lines in the execution of their roles.

He counselled that the tools, knowledge and skills of internal auditors must evolve with the evolving times.

“The tools used to carry out audits; the knowledge – terms, terminologies, applications, options, uses – of digital platforms, outlets, services; and the skills – comfort with basic computer applications and IT (Information Technology) audit software, development of IS (Information Systems) audit skills, (re)learning – must rise to meet the changes in the industry” he noted.

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He stated that where in the past auditors used paper and the infamous green pen, auditors and their tools continue to evolve to meet or stay ahead of the technologies used by businesses.

According to the Nova CEO, a new breed of internal auditors will be needed to move organizations forward in the digital world. “Business must recognize and support this as our auditors are a vital part of our workforce – training, sessions, seminars, knowledge sharing, meetings and all other avenues where new technologies are discussed should have audit team members in attendance and continually learning to stay ahead of or at least in sync with the changes.”

He said the digital role of audit in each organization must be defined, the mindsets and aspirations of internal auditors must be assessed and any roadblocks to the achievement of digital auditors must be identified and addressed by each organization.

Going down memory lane, Ude said that the “adaptations and innovations that occurred in 2020 led to the execution of a high volume of internet-based and technology-driven activities and operations, including the golden “work from home” style of business operations that continued into 2021.

“This new normal we are in today shows a continuous integration of digitization in our daily lives and by extension in our business operations. As financial institutions, the emergence of FINTECH companies is not a new topic; we now have banks either acquiring FINTECHs, FINTECHs acquiring banking licenses and banks creating FINTECH arms.

“The foregoing mean growth in customer base, transactions, revenue, regulations and by default, growth in risks, controls, and compliance concerns. The new normal demands evaluation of the opportunities presented by the changed or hybrid operations in each specific organization using methods that match the development.

“This implies that relying on or requiring physical proximity to, manual handling or operation of and/or central or fixed location or base for deliberation, review, assessment or reporting on activities need to change as the digital space, where most of the new transactions will take place, is not limited to physical or singular unique location(s).

“As our businesses adapt to bring services closer, faster and more conveniently to current, prospective and future clients, the attendant risks and controls required to manage such risks cannot be overstated,” he said.

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