There are indications that Africa’s fast growing Fintech ecosystem which surged up to 60% in the last two years as the continent’s Fintech firms grew from about 300 to about 500 in the last two years but with this boom also comes the challenges chief among which is the increase in cyberattacks. Analysts say that with about $132.8 million raised in 2018 by Fintech firms, Africa presents an opportunity for growth in the sector especially given the high mobile phone penetration levels and the boom in mobile financial services and payment technologies.
The growth in mobile technology is responsible for the high growth in Fintech in countries such as South Africa, Nigeria and Kenya that accounts for 65.2% of Africa’s Fintech startups. Speaking on this development, Bethwel Opil, Enterprise Sales Manager at Kaspersky Africa said that such Fintechs have had a significant impact on the financial services landscape of these countries, where locally, these solutions are reaching more Kenyans than ever before. He added that the tech revolution that took place in Kenya has brought about practical Fintech experiences making it one of the most financially inclusive countries in Africa and where mobile money transactions contribute a significant percentage to the country’s GDP.
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However, the downside to this development is the fact that with more local businesses and consumers taking advantage of the ability to use digital methods to move money around, criminally minded people are also having more targets to focus on thus the emerging Fintech space is also becoming an increasing target for cybercriminals.
Opil noted that young startups are always more exposed than traditional businesses, and their undeveloped infrastructure, especially at startup stage, make them an easier target than traditional banks. He pointed out that there are a growing number of businesses that are using or offering cryptocurrency and mobile money as payment methods and cybercriminals are embracing this trend, using sophisticated techniques to access such funds.
Startups should bear in mind that that operating over the internet makes Fintechs vulnerable to criminals even though mobile payment methods offer a convenience that is hard to debate. For example cases of SIM swap fraud is reported as being used to not only steal credentials and capture one-time passwords (OTPs) sent via an SMS, it can also be adopted to cause heavy financial damages customers by resetting the accounts and or allowing fraudsters to access currency accounts not only in banks, but also in Fintechs and credit unions. Challenges such as this abound because most Fintech companies do not have proper defences in place to protect their services and their users against a data breach and because the market is unregulated, it is hard to prevent. Another ugly development is that cybercriminals are presently demanding ransoms in cryptocurrency given the anonymity of the market and the fact that there is little chance of being tracked. One ready example is the kidnapping case in Abuja where the kidnappers requested that the victim’s family pay the ransom with cryptocurrency, even though the Nigerian Police eventually traced the payment to the owner of the account leading to the arrest of the criminals. To avert such, the need for more and adequate security education, awareness and ensuring that it is seen as a priority is critical as the Fintech market grows cannot be overemphasized.
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That is why Kaspersky Africa is warning that there is no substitute for vigilance – if something looks suspicious in any way, do not make the payment or investment. Consumers who are using mobile cryptocurrency as an investment or payment method should also ensure that they verify the wallet’s address. “Don’t just follow links, double check everything before sending the transaction and make sure you use a high-quality security solution to safeguard the devices you use” Opil added.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.