Building trust in fintech: Collaboration and robust practice
In the fast-growing world of fintech, effective fraud management poses a critical challenge for startups. In fact, according to a report by the World Economic Forum, the global cost of cybercrime is expected to reach $10.5 trillion by 2025. In Africa, the financial sector is the most targeted by cybercriminals, accounting for 60% of all attacks and resulting in losses estimated at 4 billion dollars every year, according to a report by IDC.
As of the 2023 Africa Financial Industry Barometer, developed in partnership with the Africa Financial Industry Summit and Deloitte, 97% of surveyed executives at the top financial institutions in Africa consider cybercrime a significant threat. While maintaining a seamless user experience is critical to growth, many fintech startups struggle to implement fraud control measures without hindering customer satisfaction. Fintechs are particularly vulnerable to fraud as they are often new and have not yet developed the robust security measures that larger financial institutions have.
Fintechs and other financial institutions must invest in building robust security measures into their products. They need measures aimed at combating hacking and other security threats, as well as regular security updates.
“The importance of continuously updating technology to effectively monitor and assess fraud is critical, as it suggests that partnering with digital KYC providers can help fintech companies effectively reduce fraud,” said Daniel Ade-Ojo, a fraud intelligence specialist at Moniepoint in during the last time. edition of Inside Identity – a virtual event series by QoreID, in partnership with TechCabal. He emphasized the need for fintech companies to establish a robust security system by leveraging standardized and advanced programs.
In 2022 alone, there were over 100 million cases of identity theft in Africa, resulting in losses of over $10 billion. Esigie Aguele, co-founder and CEO of VerifyMe Nigeria, shed light on the prevalence of identity fraud in Africa and the need to build up-to-date technologies to counter this problem. “It is important to work with KYC specialists rather than developing in-house KYC products to effectively combat identity fraud,” he said.
Similarly, Henry Ayisi Mensah, the District Police Commander in Oyibi, Eastern Region, Ghana, emphasized the importance of cross-checking for duplicate documents during client applications. He emphasized the importance of working with specialized KYC service providers to effectively reduce financial fraud.
However, it is also a place to prioritize regulators when investigating fraud, such as compliance, transparency and integrity. Stanley Jacobs, VP of the Fintech Association of Nigeria, emphasized effective communication and accountability for fintech companies as they grow and as the risk of fraud and cyber attacks increases. He highlighted the need for behavioral monitoring, blacklist management and comprehensive KYC and customer identification practices to identify and prevent infiltration of new malicious applications during account opening.
Working with KYC providers who have the expertise can help fintech companies reduce fraud and verify the identity of customers to prevent fraudulent transactions. Anthony Onyangbo, head of global credit at Lipa Later, confirms this position by suggesting the outsourcing of KYC processes to specialized service providers as a viable approach for fintech companies to counter financial fraud.
The importance of a collaborative approach and robust safeguards to safeguard the fintech industry cannot be overstated. Fintech companies and financial institutions should prioritize adopting an end-to-end fraud strategy. This strategy should be seamlessly integrated into their products to provide a seamless customer experience, while implementing identity controls, fraud mitigation measures and customer protection.
Inside Identity aims to promote knowledge sharing and collaboration within the fintech and KYC industry by encouraging discussions on proactive security measures, working with KYC specialists and staying abreast of technological advances.
