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Auditors need to embrace digitalisation – Nova Bank MD


The Managing Director/Chief Executive Officer of NOVA Merchant Bank Limited, Nath Ude has urged auditors to embrace digital tools as the world enters a information technology driven era

He spoke at the 52nd Quarterly General Meeting of the Association of Chief Audit Executives of Banks in Nigeria held in Lagos on Thursday with the theme: “The future of internal audit in an increasingly digital world. “

It brought together auditors and other stakeholders in the banking industry, including law enforcement agents, to deepen discussions on the need to create more innovative processes and formulate automation for internal auditors to succeed in the ever-evolving technology landscape.

The event was hosted by NOVA Merchant Bank Limited.

Addressing participants, Ude stated that the bank remains fully committed to supporting initiatives aimed at easing business solutions and promoting digitalisation.

On working with technology, he stated that the resulting adaptations and innovations that occurred in 2020 led to the execution of a high volume of internet based and technology driven activities and operations, including the golden “work from home” style of business operations that continued into 2021.

He noted as a high number of people across the globe came to terms with remote operations, the digital presence of individuals and businesses grew astronomically – from daily communications on social media platforms, to official meetings on Zoom, Teams, and other virtual meeting platforms, to e-payments via online banking and mobile applications, to cloud computing and storage, to remote management and reviews of numerous tasks and operations using video streaming and other audio-visual tools.

He added that these new ways of working with technology and through technology became the order of the day and now in 2022 we are living in a new normal of hybridization – a merging of the innovations, learnings and realisations brought about by the pandemic, with the old ways of physical, in-person operations – which continues to evolve.

Ude also stated that the new normal we are in today shows a continuous integration of digitisation in our daily lives and by extension in our business operations.

He noted that as financial institutions, the emergence of financial technology companies is not a new topic, adding: “We now have banks either acquiring FINTECHs, FINTECHs acquiring banking licenses and banks creating FINTECH arms.”

He said Nigeria has now moved forward to telecoms entities providing banking services to their customers: MTN and Airtel have been granted payment service Bank (PSB) licenses by the Central Bank of Nigeria, where deposit takings, cross border payments, e-wallet operations and debit/pre-paid cards can be offered to customers.

Ude emphasised that digitalisation has brought a whole new approach to how people live their daily lives and conduct their businesses.

He said: “The future is coming, some would argue that it is already here.

“Let’s project a little bit into the future: millennials, also known as Generation Y, are generally those aged 26 to 41 (born 1981 – 1996) are the working age we have today; Gen Z are generally those aged from 10 to 25 (born 1997 – 2012) are working age and soon to be working age.”

He said that businesses adapt to bring services closer, faster and more conveniently to current, prospective and future clients, the attendant risks and controls required to manage such risks cannot be overstated.

Ude said: “Just as banking evolved from having your bank account accessible from a specific branch of a specific bank located at a specific location, to where we now have borderless banking accessible from an app in a phone in our pocket; the risks have evolved from guarding the bank branch to guarding the internet connection points, cloud storage and intranet connections of our banks – all words and concepts that would have been strange as recently as 40 years ago.”

Speaking on the evolution of regulatory requirements he said: “We cannot overlook the regulatory angle of increased digitisation.

“Regulatory frameworks will, by necessity, continue to evolve in order to put checks in place around the operation and reporting of new technologies adopted by banks.

“From the use of banker’s cheques to the use money of transfer forms; from the use of ATMs to the use of internet banking and POS machines; from an Unstructured Supplementary Service Data codes and mobile money apps to the use of Quick Response codes, regulations have evolved to protect customers and Banks from exploitation, abuse and misuse.”

On auditing in a digital era, Ude said: “The tools, knowledge and skills of internal auditors must evolve with the evolving times.

“The tools used to carry out audits; the knowledge – terms, terminologies, applications, options, uses – of digital platforms, outlets, services; and the skills – comfort with basic computer applications and Information Technology audit software, development of Information Systems audit skills, (re)learning – must rise to meet the changes in the industry.”

Speaking on the digital reality of today, Ude stated: “The technological advancement in hardware and software applications, have brought about automations that continuously reduce the need for human interference in processes and by default, human interference in auditing of such processes; especially where the applications are intelligent systems that learn and evolve based on their learnings – most commonly referred to as Artificial Intelligence.

“We have robots responding to customer queries on websites and mobile apps, we have cookies that record and report on webpages visited by website users, we have algorithms that report on how often an item was clicked on, how long a page was open and whether a transaction was concluded on shopping sites, streaming services, social media sites, etc.

“We can speak to our phones and other devices, and they respond to our enquiry.

“Virtual reality systems are growing in the real world – once mainly only focused on or used by gamers, now we have the metaverse where a whole ecosystem can be created for people to live digital lives, where meetings can be held in virtual reality simulated spaces by people in different locations on the globe, each fully seated at a desk or in a board room with a presentation being made by a facilitator in a virtual office with attendees using avatars of their choosing.”

In conclusion, Ude noted that in the past auditors used paper and the infamous green pen auditors and their tools continue to evolve to meet or stay ahead of the technologies used by businesses.

He stated that a new breed of internal auditors will be needed to move organisation forward in the digital world.

He said that business must recognise and support this as our auditors are a vital part of our workforce – trainings, sessions, seminars, knowledge sharing, meetings and all other avenues where new technologies are discussed should have audit team members in attendance and continually learning to stay ahead of or at least in sync with the changes.

He noted that the journey has already begun, the digital role of audit in each organisation must be defined, the mindsets and aspirations of internal auditors must be assessed and any roadblocks to the achievement of digital auditors must be identified and addressed by each organisation.

He added that the regular upskilling, trainings, attendance at seminars and knowledge sharing sessions, continuous engagements with groups such as the Association of Chief Audit Executives of Banks in Nigeria, security agencies and continuous interactions with regulators, would serve to keep auditors abreast of new technologies, audit approaches and guidelines and regulations affecting new and emerging technologies.

Association of Chief Audit Executives of Banks in Nigeria, Nath Ude, Nova Merchant Bank

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