Financial Fraud

We all have a part to play when it comes to eliminating financial fraud

For a long time now, financial service providers have sought to redefine the customer experience in the face of 21 st century technological advancements. The main objective of this has been to leverage on technology to provide increased convenience for everyone.

Unfortunately, the quest for convenience has been occasioned by alleged cases of fraud. A case in point is the online assault on Equity Bank’s e-Banking services for alleged fraud within its set-up. How is it that institutions with some of the most secure e-banking platforms
on the continent are being put on the spot?

Obtaining a safe and secure environment for banking is the most important concern for all banking and financial sector players. However, despite the noble efforts to secure transactions within the banking sector, skilled criminal hackers are now acquiring data from
unsuspecting customers and accessing their accounts – mostly without the user’s knowledge. When bank accounts are accessed and funds transferred or ‘made to disappear’ without the owners ‘consent,’ banks are always faulted for alleged collusion. Why?

Many wonder how their details can be accessed but they use their passwords to access their bank accounts while connected to public Wi-Fi, they give their devices to friends/relatives, have games that can read messages and communicate with the device without your
knowledge – including reading your saved passwords and transmitting them to unknown servers, and having other people including children use your device while your apps are open or not protected in any way.

What is happening right now is a reversal of the many benefits of technology, and the skills criminals have mastered to bypass and go around security and authentication frameworks in banking.

Let’s take the current scenario, Equity Bank now has 17.8 million customers i.e., if you were to meet any 3 adult Kenyans today, it is very likely that 1.5 of them bank with Equity. It is for this reason that fraudsters have become susceptible with its retail customers.
While the bank has created interventions to increase security of transactions, financial processes, and at the same time a sustained public awareness and consumer education on common fraud tactics in the industry, lapses on the customer side are hard to identify and
present. Once the customer reports an issue, there is also the investigation process that can only be undertaken within the confines of the law.

Based on data, the primary threat has been through sim swap services. This is where a fraudster gets hold of your phone, and even a copy of you ID, and proceeds to literally become you. These cases are not uncommon nowadays and since financial services have
diversified to allow you to withdraw, send and borrow money from your sim card, a person having your sim card and ID Number is disastrous.

We have seen the increase in court cases where people’s savings have been wiped out and since there is no one to blame, financial services providers are automatically allotted all the blame. The truth is, if we were more careful with our personal information and in taking time to understand the license agreements of the apps we install on our phones, we wouldn’t be in so much trouble with our savings or our money.

Telecommunication service providers need to work closely with security agencies round the clock to increase surveillance around sim swap services. Someone having an ID should not automatically qualify to be the owner of the said sim card. There needs to be another level of verification. The ease of sim swap services is putting banks and other e-banking service providers on the spot.

According to the PwC’s Global Economic Crime and Fraud Survey, 2022, 69% of reported incidents of fraud were committed by an external perpetrator or collusion between an insider and an external party. With the adoption of digital platforms fraud continues to expand nearly exponentially as data grows in volume, variety, and velocity as more sophisticated forms of fraud emerge. Based on these insights, the war against fraud and financial crime can only be won from a united front with all the stakeholders including the relevant government agencies in security, the judiciary, data protection agencies and private players in the financial services and telecommunications sectors among others.

As institutions continue to invest in technological advancements, it is important to invest in educating customers and the public to be vigilant against fraudsters at all touchpoints however, all key players including the public have a critical role to play in the ecosystem.
Once we close in the glaring loopholes, everything else will follow and fraud cases will be reduced by a great percentage.