Kenya’s banking system needs to collaborate and work together to minimize the risks of innovation while maximizing the benefits, the central bank says.
According to the Central Bank of Kenya’s ‘the banking sector innovation survey’ this will enable the financial sector to address the risks and challenges arising from cyber security and the disruptions being thrown up by technology adoption.
The survey found that Cyber-risk (data privacy and data security risk) turned out to be the key risk for institutions in their innovation endeavours, similar to the findings of the 2018-2020 Innovation Surveys.
In the survey, 92 percent of banks and 86 percent of microfinance banks (MFBs) identified it as one of the top three innovation-related risks.
71 percent of MFBs and 67 percent of banks consider third-party and vendor management risks as the key innovation-related risks.
“This correlates with majority of the institutions who responded to using an outsourced or collaboration and partnership approach to development of innovative products,” part of the survey states on innovation risks.
“A study paper on human-centered cybersecurity: Kenyan Fintech sector,” prepared by KICTANet, in collaboration with Trust4Cyber Flagship Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, says emerging threats in Kenya are organized crime, exporting cybercriminals to the East African region.
Cybercriminals moving from the financial sector to other areas, social media-related scams, API integration weaknesses, ATM attacks, third party attacks, cloud penetrated attacks, crypto mining on local systems, and ransomware and end-user system hijacking.
On the other hand, the Kenya Bankers Association (KBA) says consumer education will play a central role in addressing emerging security challenges.
“Over the past few years, cases of social engineering and identity theft have persisted. Similarly, cases of phishing emails, malware attacks, and baiting have scaled up in tandem with the enhanced uptake of internet and mobile transaction platforms,’’ said Dr. Habil Olaka, CEO KBA said Wednesday during the launch of the Kaa Chonjo! (Be Alert!) card, mobile, and online safety awareness campaign.
Themed ‘Fraud Mitigation Through Consumer Awareness’, this year’s campaign will be held on the back of a sustained uptake of digital banking solutions.
According to the Banking Industry Customer Satisfaction Survey (2021), the switch to digital platforms has continued to rise, with up to 60 percent of the banking public preferring contactless banking through channels such as mobile, the Internet, and cards.
Despite the use of cards remaining low in Kenya, Eva Ngigi, the Country Manager for Visa in Kenya said that it is an improvement from the last few years.
“We have seen keen interest across the ecosystem to support the continued uptake of digital payments. The Central Bank of Kenya has recently developed the National Payment Strategy (NPS) for 2022 – 2025 to better regulate the ecosystem for the benefit of all those involved,” she noted.
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