The appetite for technological innovations in the banking system appears to be pervasive but it is risky, thus, requiring the Deposit Insurance Scheme, DIS, and other safety-net players to remain vigilant in order to address emerging risks.
The corporation has evolved overtime and has continued to pursue strategies that enhance its operational resilience through innovation, strong risk management, highly motivated and empowered workforce, dynamism and adaptability, fit-for-purpose business model, strong leadership and collaboration with critical stakeholders.
The Director, Bank Examination Department, Nigeria Deposit Insurance Corporation, NDIC, Olatayo Babatolu stated this at the ongoing 2021 NDIC Retreat for Business Editors and Finance Correspondents Association of Nigeria, FICAN, with the theme: Resilience and Reinvention Strategies for Deposit Insurance System in the Face of Extreme Disruption in the Banking System in Gombe, Gombe State.
Represented by Deputy Director, BED, NDIC, Michael Oladele, he said, “the financial service environment is ever changing. The global economy, as we see it today, was different in the past, and surely, will be drastically different in the future. The banking system disruption is happening very fast, therefore, the DIS will have to rapidly adapt, withstand, and recover from the disruptions and to be able to continue to play its vital role as a safety-net component”.
The corporation according to him has evolved overtime and has continued to pursue strategies that enhance its operational resilience through innovation, strong risk management, highly motivated and empowered workforce, dynamism and adaptability, fit-for-purpose business model, strong leadership and collaboration with critical stakeholders.
A DIS can adopt the following strategies to foster resilience which he listed to include: Risk Management Culture which is a deep rooted culture of risk management enables the organisation to be prepared for any vulnerabilities prior to occurrence and put in place adequate plans to mitigate them.
Resilient Workforce, I. e, a motivated and self-empowered workforce to take risks, foster accountability of its actions, and skilled to come up with contingency plans in the face of any obstacle or chaos in the organization. Sensitivity to Threats. Focused on the possibility that something could go wrong and recognise complexity which is a deliberate effort to create a complete picture of the work environment and encourage diversity in perceptions so that assumptions can be challenged.
Others are adaptive and flexible, that is, ability to change, evolve, and adapt in response to changing circumstances and the ability to apply existing resources to new purposes. Strong Leadership which is board and senior management with strong awareness that their decision making affect the entire organization. Decentralised Decision Making: Recognising staff expertise and allowing them to make critical decision during crisis periods and collaboration: Engagement with its stakeholders for a common purpose or goal. The inclusion of its people in the collaboration results in a sense of shared ownership or a joint vision to build resilience.
As a critical component of the financial safety-net arrangement, he said, “a Deposit Insurance System, DIS, must be resilient in the ever changing and unpredictable financial environment and reinvent beyond the current crisis. So also that resilience is the ability to deliver operations, including critical operations and core business lines, through a disruption from any hazard.
“It is the ability of an organization to absorb and adapt in a changing environment to enable it to deliver its objectives and to survive and prosper. It is an outcome of effective operational risk management combined with sufficient financial and operational resources to prepare, adapt, withstand, and recover from disruptions”, stated the Director.
“A DIS’s resilience strategies should encompass: Business Continuity Plan (BCP) which plans out and rehearses a response to all identified, likely, or anticipated operational disruptions and risks. Disaster Recovery Plan, DRP, which provides a strategy to recover from real disruptions or disasters. Value Protection Plan, VPP, which ensures shareholders value and stakeholder relations are protected in times of disruptions”, stressed Babatolu.
Speaking further on digital disruption, he said, “the global financial services industry is facing a wave of digital disruption with FinTech competing with traditional financial approaches in the delivery of financial services and making financial services more accessible to the general public”.
The emergence of technology enabled innovation in financial services according to him is the result of a confluence of drivers such as: Shifting customer expectations or preferences particularly amongst millennials and “digital natives” with regard to convenience, speed, user friendly and cost of financial services, growing financial influence of computer and mobile savvy millennials, economic development and convergence in growing emerging market and frontier economies and evolving technology, particularly that related to the internet, big data, mobile technology and computer.
