EKO HOT BLOG reports that Fidelity Bank, a major commercial bank in Nigeria, has recently imposed limits on financial transfers to neobanks like as OPay, Moniepoint, and Palmpay.
This decision is in reaction to worries about neobanks’ poor KYC (Know Your Customer) practices, which have resulted in a rise in fraudulent activity, according to TechCabal.
Fidelity Bank has decided to restrict consumer fund transfers to neobanks. This restriction affects notable neobanks like as Moniepoint, Kuda, OPay, and PalmPay.
Customers have noticed the disappearance of these neobanks from the approved financial institutions list on Fidelity Bank’s mobile app, which has been confirmed by numerous people close to the subject.
These digital banking services are currently unavailable for selection on the app.
A fidelity Bank branch
Although Fidelity Bank stated that the restrictions were imposed as a result of an app upgrade, sources within the affected fintech companies and two persons with direct knowledge of the situation revealed a different rationale.
According to them, the transfer limitations were imposed two weeks ago primarily to address rising concerns related to fraud and customer verification.
In reaction to this development, OPay has denied being impacted by the restrictions, despite customer complaints suggesting otherwise.
Palmpay’s Chief Marketing Officer, Sofia Zab, disclosed that Fidelity Bank notified them of an ongoing systems upgrade, and once completed, they would be reinstated.
Moniepoint also confirmed the existence of the transfer restriction.
Insiders familiar with the situation have asserted that these restrictions stem from mounting losses incurred through cyber attacks and fraudulent activities.
Several banking industry experts have attributed these losses to inadequate due diligence and KYC practices.
A bank source, wishing to remain anonymous, emphasized the need for improvements and stated that until neobanks rectify these issues, they will continue to face difficulties, including potential restrictions imposed by banks.
While Fidelity Bank did not specify the exact KYC concerns, neobanks are diligently working to address these issues.
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