.
Fintech companies seeking to expand into regulated banking services through the acquisition of microfinance banks could end up inheriting costly compliance and regulatory challenges, Babatunde Akin-Moses, founder of Nigerian fintech Sycamore, has warned.
Akin-Moses said fintechs need to conduct deeper regulatory and operational due diligence before acquiring microfinance banks, particularly as the Central Bank of Nigeria (CBN) intensifies supervision of the sector and takes action against institutions that fail to meet licensing requirements.
His comments come amid renewed attention on the risks attached to fintech-led acquisitions of financial institutions following the CBN’s decision to revoke the operating licences of 46 microfinance banks in July 2026.
MFB Licences Can Come With Hidden Obligations
According to Akin-Moses, acquiring an existing microfinance bank may appear to offer fintechs a faster route into regulated financial services, but the transaction can also expose buyers to obligations accumulated under the previous ownership.
These could include unresolved regulatory requirements, compliance gaps, operational weaknesses and other liabilities that may not be immediately obvious when an acquisition is being considered.
The warning is particularly relevant as fintech companies increasingly explore regulated banking structures to expand beyond lending, payments and other technology-driven financial services.
For companies entering the space, acquiring an existing institution can provide an established regulatory framework, but it also means assuming responsibility for ensuring that the institution meets the CBN’s requirements.
CBN Tightens Scrutiny of Microfinance Banks
The regulatory environment has become increasingly demanding for MFB operators.
The CBN revoked the licences of 46 microfinance banks effective July 1, 2026, citing failures including insufficient assets to cover liabilities, prolonged inactivity, failure to commence operations within prescribed periods and failure to maintain required capital.
The affected institutions included Sycamore Microfinance Bank, alongside other fintech-linked MFBs such as NOW NOW Digital MFB, OurPass MFB, Creditville MFB and Casha MFB.
The exercise underscores the regulator’s increasingly strict approach to licensing, capital adequacy, operational activity and institutional compliance.
Sycamore Says Its Core Operations Are Unaffected
Sycamore’s inclusion on the revoked-licence list generated attention because the fintech had acquired the affected Kano-based MFB as part of its planned expansion into deposit-taking and payments.
The company subsequently clarified that the revoked entity was separate from its existing customer-facing businesses and had not been fully integrated into its operations when the CBN review took place.
Sycamore said its core consumer-lending business and investment operations continue under their respective regulatory approvals and that existing customers were not affected by the licence revocation.
The company also explained that the acquired MFB had not yet been integrated into its operational and customer-facing infrastructure and did not hold customer deposits belonging to Sycamore’s existing user base.
Acquisition Does Not Automatically Mean Regulatory Certainty
The episode highlights a broader issue for fintechs pursuing acquisitions in Nigeria’s financial sector.
Buying a licensed institution may provide access to an existing regulatory structure, but the licence itself does not eliminate the need for continuous compliance. The acquiring company must ensure that the institution remains financially sound, operationally active and compliant with applicable CBN requirements.
This makes due diligence particularly important, as fintechs may need to examine an MFB’s regulatory history, capital position, operational records and outstanding obligations before completing a transaction.
Fintechs Increasingly Seek Regulated Structures
The growing interest in MFB acquisitions reflects fintech companies’ efforts to broaden their financial-service offerings.
A regulated banking entity can potentially give fintechs greater control over deposit-taking, payments and other financial products, allowing them to move beyond partnerships with traditional banks.
Sycamore itself had pursued an MFB structure as part of its expansion into deposit-taking and payments. Its experience demonstrates, however, that regulatory strategy must evolve alongside changes in a fintech’s business model.
Regulatory Compliance Becomes a Strategic Issue
The CBN’s latest enforcement actions suggest that regulatory compliance is becoming more than a back-office requirement for fintechs operating in Nigeria’s financial sector.
For companies pursuing acquisitions, the cost of maintaining an acquired institution’s licence, meeting capital requirements and addressing legacy compliance issues can materially affect the economics of the transaction.
As fintechs continue to seek greater control over financial infrastructure, industry participants may therefore need to weigh the benefits of acquiring regulated institutions against the financial and operational obligations that come with them.
The Sycamore episode ultimately highlights a broader lesson for Nigeria’s fintech sector: regulatory licences can create valuable opportunities, but acquiring one can also bring responsibilities that extend well beyond the transaction itself.
