Fidelity Bank has taken measures to restrict consumer fund transfers to several neobanks, including OPay, Moniepoint, Kuda, and PalmPay, News About Nigeria reports.
This decision, as reported by TechCabal, is grounded in concerns regarding lax Know Your Customer (KYC) processes, which are believed to be contributing to a surge in fraud cases.
The initial signs of this restriction emerged when a small number of customers observed that the neobanks were no longer listed on the Fidelity Bank app as approved financial institutions.
This development has now been confirmed by at least five different sources.
As of the time of reporting, these affected digital financial services remain unavailable for selection on Fidelity Bank’s mobile app.
While the bank informed customers that the restrictions were linked to an app upgrade, two individuals with direct knowledge of the situation, along with other sources at the affected fintech firms, provided a different account.
According to information received from five sources closely connected to the matter, the transfer restrictions commenced at least two weeks ago due to growing concerns related to fraud and customer verification.
Despite customer complaints indicating the impact of these restrictions, OPay denied being affected, while Palmpay’s Chief Marketing Officer, Sofia Zab, stated that they were informed of system upgrades and that they would be reactivated afterward.
A source at Moniepoint also confirmed the restrictions. Fidelity Bank declined to comment on this matter.
Sources associated with the bank informed TechCabal that the restrictions were prompted by an increase in fraud losses.
Several industry experts reported significant losses to cyberattacks and fraudulent activities by Nigerian banks and fintech companies since the beginning of the year.
These issues are primarily related to due diligence and KYC (Know Your Customer) processes, as explained by a source from a bank who preferred to remain anonymous.
“Until they get their house in order, they will continue to experience issues [like being blocked] by banks,” the source stated.
Per insiders, neobanks like OPay and Moniepoint often employ third-party verification companies to collect and verify customer information. These providers conduct remote customer identity verification using digital documents and biometric authentication.
While this verification process offers speed and convenience for customers, traditional banks harbour doubts about its sufficiency.
It remains unclear whether Fidelity Bank communicated with the Central Bank of Nigeria (CBN) before implementing the restrictions.
Sources close to the situation suggest that the bank likely acted without the regulator’s consent, as they can independently make such decisions in response to potential issues.
If regulatory authorities inquire about the matter, banks may attribute such actions to technical issues, an industry leader suggested.
