Banks lost N9.5 billion to electronic fraud within first eight months of this year amid growing threats of cybercrime. Tackling rising cases of electronic payment fraud requires collaboration of critical stakeholders – banks, telcos and financial sector regulators. Deputy Group Business Editor, Taofik Salako and Assistant Business Editor, Collins Nweze examine stakeholders’ concerns and ways to make the e-payment ecosystem safe and secured.
Safe and secured financial sector requires the contributions of critical stakeholders and huge investment in technology.
Experts across the public and private sectors said advancements in technology come with increasing cyber threats, thus the need for regulators and operators to be more proactive and innovative in addressing security and efficiency of the national digital payment system.
E-payment security and operations were the focus of the discussions at this year’s Finance Correspondents Association of Nigeria’s (FICAN) conference in Lagos.
Speaking on the theme: “Strengthening Digital infrastructure for efficient innovative payment system in Nigeria”, experts agreed on the role of technology, multi-sectoral collaboration and private-public cooperation in addressing the challenges of electronic fraud.
Head, Digital Banking, United Bank for Africa (UBA), Olukayode Olubiyi, said stakeholders needed to checkmate the threats to the country’s digital payment system.
This was reaffirmed by Nigeria Communication Commission (NCC), Nigerian Interbank Settlement System (NIBSS), Lotus Bank, Development Bank of Nigeria (DBN), PalmPay, Parthian Partners and other stakeholders. They stressed the importance of a multidimensional collaboration in enhancing the country’s payment system.
Olubiyi said cyber threats are one of the most prevalent threats facing digital payment technology. The banks lost a total of N9.5 billion to electronic fraud within first eight months of the year.
He pointed out that lack of proper or insufficient regulatory oversight over the digital payments system could result in major and systemic loss of business, noting that regulations covering digital payments should be robust and designed to enable a secure and competitive landscape for digital payments players to run seamlessly.
“Cybercrime poses a huge challenge for the firms in the digital banking space. Hence, it becomes imperative that institutions secure the data that the criminals are after,” Olubiyi said.
According to him, banks would have to invest heavily in systems and processes to defend their customers’ data.
“Partnerships between banks and fintechs may be required in the use of machine-learning technology systems, Artificial Intelligence to proactively prevent potential breaches and data loss.
“Cybercrime can be curbed by ensuring efficient cybersecurity through combined security, multi-factor authentication, cyber insurance, consumer awareness, antivirus and anti-malware application,” Olubiyi added.
He remarked that digital payments had become an increasing target of cyber hacks and attacks and that could result on loss of confidence in the ecosystem if not addressed.
He added: “Today, the speed at which organisations and digitally drive their systems is at such an alarming rate. Any future-minded institution would want to join in the race. Companies climb on this ladder of ranking is so dynamic that no firm has its permanent hold on any position.”
He noted that the government and financial institutions were focused on increasing financial inclusion, especially in rural areas, and initiatives like the National Financial Inclusion Strategy aimed to bring more people into the formal financial sector.
According to him, the future account holders are the users of the digital solutions, largely the Gen-Z and Millennials, saying that these two generations make up over 80 per cent of digitally-enabled bank accounts by the statistical research evidenced above.
He said: “At UBA, our mobile transactions recorded 414 million count of transactions and N19.3 trillion value of transactions in 2022 as against 118 million count of transactions and N6.4 trillion value of transactions in 2021.
“In the 21st century, the development of digital banking is transforming the landscape of traditional retail banking across the globe. This, however, set the tone for the future of digital banking for all.”
He explained that the use of Internet of Things (IoT) in the industry could provide customers with a more personalised, convenient and secure banking experience.
“It is predicted that digital wallets will account for more than 50 per cent of ecommerce payments worldwide by 2024, with account and QR-code based transactions leading the way.
“The next winners in the digital banking race will be the banks who manage to continuously generate tailored offers and personalised experiences for their customers. The answer to understanding what customers want and need lies within the amount of data across different banking channels,” Olubiyi said.
Olubiyi added that by end of 2023, the need for a secure and smooth authentication would prompt nearly 2.6 billion biometric payment users globally.
Executive Vice Chairman, Nigeria Communication Commission (NCC), Prof. Umar Danbatta, underscored the importance of long-term capital investments in human capability and technology to create efficient and safe digital payment ecosystem.
“Strengthening digital infrastructure for efficient and innovative payment systems in Nigeria is a long-term endeavour that requires collaboration, investment, and adaptability. By addressing these strategies comprehensively and proactively, Nigeria can build a robust and inclusive digital payment ecosystem that benefits its citizens and drives economic growth,” Danbatta said.
He stressed the need to improve collaboration between the NCC and financial regulators such as the CBN, to enable proper coordination of policies and regulations related to digital payments and telecommunications.
According to him, this would ensure that the regulatory environment is conducive for innovation and growth.
He further stressed the need to encourage partnerships among financial institutions, telecom operators, and fintech companies to develop and deliver innovative digital payment solutions.
He added that the country needed to leverage the expertise and resources of the private sector to expand and improve digital infrastructure.
“The government should take a leading role in promoting digital payments by setting a clear vision and providing support.
“Implement e-government initiatives to promote digital payments for public services and benefits distribution,” Danbatta, who was represented by a Deputy Director at the commission, Engr Anthony Ikemefuna, noted.
He called on telecom operators to support financial inclusion initiatives by partnering with banks and fintech companies to offer mobile banking and payment services to unbanked and under-banked populations.
Managing Director, Nigerian Inter Bank Settlement Systems (NIBSS), Premier Oiwoh, emphasised stakeholders’ partnership to extend e-payment channels across the country.
According to Oiwoh, the partnership will, in addition to wider coverage, also help to check abuses, dispense errors, instant resolution of errors as well as updated in technological resources in delivering first-class e- payment across the country.
The NIBSS boss, who was represented at conference by the Divisional Head, Enterprise Support NIBSS Bola Onigbokan, said: “Collaboration is mandatory; it is not a choice. As we have gathered here doing our workshop, the fraudsters are also doing their seminars and they strategise. Often times, they are even ahead of us. I think that is even why we are even having this discussion today.”
He assured Nigerians that the national payment infrastructure of NIBSS, owned by banks, were committed to ensuring seamless transactions, customer protection, and the improvement in technologies driving e-payment systems.
Relating personal experiences in forestalling e-fraud, Lotus Bank stressed that it had enhanced its capabilities in advancing customer-centric solutions to ensure ease of payment. DBN said efficient payment system is key to the country’s growth and development.
Head, Corporate Services, Development Bank of Nigeria (DBN), Idris Salihu said the bank was leveraging digital infrastructure as well as physical training through its DBN Learning Management System (LMS) to train micro, small and medium enterprises (MSMEs).
He added that the bank’s support to MSMEs across the nation does not discriminate, although it may seem to be concentrated in certain cities probably because of high concentration of commercial activities in such areas.
Lotus Bank expressed readiness to join hands with key stakeholders in the banking sector to further enhance the infrastructure for “effective innovative payment system solutions”.
“Our paperless branches aim to embody the bank’s ethos to create value and growth through digital innovation by offering self-service and assisted banking solutions, powered by digital technology.
“With our paperless branches, you can deposit and withdraw cash, apply for financing and much more with the use of biometrics only.
“In addition to touchscreens and tablets offering information and product guidance to customers, trained universal bankers are to guide customers and offer personalised assistance with accessing the right digital solutions for their transactions. It’s not only innovative but also good for the environment too,” Lotus Bank stated.
Chairman, Finance Correspondents Association of Nigeria (FICAN), Chima Nwokoji, stated that the challenges in the country’s payment system during the cash scarcity provided a window of opportunity for the banking system to be proactive and inventive.
According to him, this would enable the lenders to reap the benefits provided by electronic payments.
“As banks and fintech are expanding their financial services portfolios to capture the unbanked and semi-banked, they should not only be expanding their digital infrastructure but also making it more sophisticated to ensure seamless transaction and safety of funds,” Nwokoji said.
With Nigeria’s focus on expanding its financial services to become the continental hub, there’s no doubt the need for a stronger collaboration across the public and private sectors to ease digital payment worries and build global confidence in the national payment ecosystem, he added.
