Africa’s budding Fintech Industry and growing cyber attacks
The FinTech network in Africa has witnessed a 60% rise over the past two years on the back of some serious investment witnessed in the sector. In the year 2018, about $132.8M was raised in funds and innovators growing from 301 recorded in 2017 to 491. The Africa FinTech industry is truly thriving with the report coming in last year proving to the best so far, indicating the sector is truly ready for the next step of its evolution.
As a matter of fact, the advancement made in mobile technology has given the African FinTech ecosystem the room to make a breakthrough in the financial market with Kenya, South Africa, and Nigeria accounting for about 65.2% of the FinTech startups in Africa. In Kenya, for example, these FinTech companies are having a substantial impact on the financial markets with the solutions offered, getting to more locals than it could before. The FinTech sector has turned these countries into a more financially inclusive nation with mobile money adding a substantial percentage to the GDP of these countries.
The Booming Fintech Industry: A Hunting Ground for Cybercriminals
As more users and businesses turn to the versatility of digital transactions and its benefits, so have cybercriminals turn their attention to it as a new hunting ground for their crimes. New FinTech startups are more vulnerable than the traditional banking institutions, particularly as a fresh startup, their underdeveloped structure exposes their weak spot for cybercriminals to exploit. In fact, there is seemingly a defined process of cyber attacks on new startup firms.
Furthermore, the increasing number of companies making use of or providing mobile money and cryptocurrencies as a form of payment has seen cybercriminals also venture into the fintech sector use of high-level technologies to perpetrate their crimes. The FinTech industries rely on the internet for most of their operations and that has made them an easy target for cyber-attacks along with other technological problems. Although mobile payment provides a lot of ease during a transaction, there is no doubt that the system is under constant attacks.
One of the fraudulent means of stealing credentials and accessing One Time Passwords (OTPs) is the use of SIM swap by these cybercriminals. They could also cause the victims severe financial loss through resetting the victims’ accounts so as to gain entry into the currency accounts held in FinTech companies, banks and credit unions. A lot of FinTech firms lack the proper infrastructure and cybersecurity measures required to defend themselves against such attacks and protect their customers against theft of crucial financial data. To compound the issue, unregulated markets like cryptocurrency make it even more difficult for any sort of control.
We are witnessing the rise of crypto-ransoms from these cybercriminals due to the anonymous nature of the crypto sector which leaves little to no chance of tracing these criminals. Therefore, awareness campaigns, education on security and treating this issue as urgent is vital as the FinTech industry expands. The need for vigilance cannot be sidetracked as the consumer need to be extra careful with their investment and payment.
The African FinTech sector will continue to expand as it continues to offer an avenue for investments and the potential it holds for high growth. Nevertheless, similar to every other expanding digital economy, it presents an opportunity for cybercriminals see opportunities for cybercrime. Although the issue of security in the sector and that of cybercrimes have become talking points recently, there is a need to make it a priority in the industry so that the industry players can reap the full benefits to the FinTech sector.