Africa’s Fintech sector is booming! According to reports, Africa’s Fintech ecosystem has surged 60% in the last two years and the continent’s Fintech firms have grown to 491 from 301 in 2017, with $132.8 million raised in 2018, making last year the sector’s best year yet – and proving the sector’s readiness given the high mobile phone penetration levels and the boom in mobile financial services and payment technologies.
In fact, the development of mobile technology has paved the way for Africa’s Fintech revolution where South Africa, Nigeria and Kenya account for Africa’s Fintech startups. “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,” says Bethwel Opil, Enterprise Sales Manager at Kaspersky in Africa. “In fact, 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.”
Locally, many businesses and consumers are taking advantage of the ability to use digital methods to move money around. However, this emerging Fintech space is also becoming an increasing target for cybercriminals.
“Young startups are always more exposed than traditional businesses, and their undeveloped infrastructure, especially at the startup stage, make them an easier target than traditional banks,” says Opil. “Additionally, 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 funds.”
The rise of cyberattacks
Operating over the Internet makes Fintechs vulnerable to technological problems and cybercrime and, while mobile payment methods offer a convenience that is hard to debate, the system is suffering a wave of attack. SIM swap fraud is being used to not only steal credentials and capture one-time passwords (OTPs) sent via an SMS, but also to cause financial damage to victims by resetting the accounts and allowing fraudsters to access currency accounts not only in banks but also in Fintechs and credit unions.
“Most Fintech companies do not have proper defences in place to protect their services and their users against a data breach and the unregulated market doesn’t make it easier,” add Opil. “We are also now seeing cybercriminals demanding ransoms in cryptocurrency given the anonymity of the market and the fact that there is little chance of being tracked. As a result, security education, awareness and ensuring that it is seen as a priority is critical as the Fintech market grows.”
According to Opil, there is also 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.”
The Fintech market in Africa will continue to grow – providing high growth potential and opportunities for investments, while simultaneously addressing the need for financial inclusion. “However, like any growing digital economy, where there is an opportunity, there are cybercriminals. And while cybercrime and the importance of security have certainly come to the fore, it needs to be a priority on the business agenda to ensure we can reap the benefits of a maturing Fintech space,” concludes Opil.