You’ve opened a new bank account and one of the features is an online app that allows you to manage your funds, pay accounts, buy goods online, and send money to your family. This always-on, digital form of transacting is the new face of financial services, bringing 24/7 banking amenities to the fingertips of users. But behind the convenience and accessibility lurks the very real danger of cyber breaches that could have devastating consequences.
Banking apps are a small piece of a far larger puzzle. According to an IDC report, Africa’s financial sector accounts for 60% of all cyber-attacks, with a resultant $4 billion annual loss. Nigeria’s fintech sector hasn’t remained untouched, with reports of three organisations losing over N5 billion in early 2023 to hacking incidents, in what is just the tip of a cyber-attack iceberg.
The solution seems simple – fintechs need to invest in security measures that combat hacking, data breaches, and other security threats. In reality though, fraudsters are using increasingly sophisticated methods, from security loopholes to collusion with internal staff. Also, Africa’s fintech ecosystem includes many newer players that may not yet have the security measures in place that the larger financial institutions do, making them easier targets for unsavoury activities.
The need for watertight cyber security measures has never been more pressing, while at the same time complying with legal requirements and maintaining effective corporate governance. Fortunately, the matter is being taken seriously at the highest levels of Nigeria’s government, with the Cybercrimes Act (amended 2024) providing a framework for the detection, prevention, and prosecution of activities relating to cybercrime. And in another move, the Central Bank of Nigeria has repealed its intention to enforce compliance with cyber regulations by fintechs through a cyber security levy, moving away from what was viewed as a costly approach.
Industry leaders are also highly aware of the dangers posed by cybercrime, with the 2023 Africa Financial Industry Barometer survey revealing that 97% of executives at Africa’s top financial institutions deem it to be a significant threat. Cyber security threats like malware and ransomware, data breaches, and digital fraud pose significant concerns when it comes to consumers’ confidence in the systems managing their financial matters, so it’s in the best interests of these institutions to ensure that their systems are adequately secured.
This is where the support of an experienced cyber security solutions provider like Liquid Intelligent Technologies is essential. Cyber security solutions need to be tailored to Nigerian entities’ specific circumstances, taking into consideration the country’s risk profile. Along with ensuring regulatory compliance, elements like cloud and network security, employee training, security audits, access controls, and even having a comprehensive incident response plan in place in case the unthinkable happens, are all critical.
Nigerian fintechs are tasked with finding the fine balance between the country’s digital transformation drive, a rapidly growing financial sector where customers are looking for innovative digital banking solutions, and the tide of cyber criminals constantly looking for any opportunity to break through the security barriers and exploit both citizens and institutions. These fintechs have a duty of care towards their customers’ data and funds and need to take every precaution to secure them.
As cyber criminals become more inventive, so too must all stakeholders in Nigeria’s fintech ecosystem: government, fintechs, and cyber solutions providers like Liquid. This is how trust and sustainability in the fintech sector will flourish.
