Regulating fintech for financial stability in Nigeria: balancing cybersecurity risks and financial inclusion

The growing reliance on financial technology (FinTech) firms in Nigeria has step up concerns surrounding cybersecurity vulnerabilities, the effectiveness of regulatory interventions, levels of consumer confidence, systemic resilience, and extent of financial inclusion. This has initiated the need to investigate how these variables interact, in order to understand their interdependencies, mitigate the frequency and impact of cyberattacks, and safeguard consumer trust in digital financial services. A total of 248 structured responses were obtained through a google form survey administered to three distinct groups FinTech users, regulatory bodies, and financial industry experts. Using a stratified random sampling, samples were drawn from three major cities in Nigeria, 84 respondents from Abuja, 91respondents from Lagos and 73 respondents Port Harcourt. The empirical analysis was carried out employing 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 financial access.