Cyber Crime in Finance: Eritrea’s Banks and Fintechs Under Threat as Cyber Attacks Rise Across Africa
Top Risk Factor for Financial Institutions in Africa: Cybersecurity Concerns
For the second consecutive year, executives of financial institutions in Africa have identified cybersecurity concerns as their top risk factor. According to the 2023 African Financial Industry Barometer survey, a staggering 74% of participants called for improvement in cybersecurity regulation.
Cybercrime: A Significant Threat to Financial Institutions
The report, developed in partnership with the Africa Financial Industry Summit and Deloitte, found that 97% of surveyed executives at top financial institutions in Africa consider cybercrime a significant threat. Macroeconomic conditions, political and social instability, and security risks were also identified as major threats facing financial institutions on the continent.
Estimated Annual Losses from Cybersecurity Incidents
Cybersecurity incidents result in losses estimated between $3.5 billion and $4 billion every year across Africa. Financial leaders in the region rank cybercrime and regulatory constraints on cybersecurity as the leading threat to the financial services industry alongside worsening economic conditions.
Recent Cyber Attacks and Fraud Incidents
In recent weeks, a Nigerian cybersecurity professional, David Sennaike, uncovered a dark web forum offering leaked data containing customer information, login details of employees, and API access of 43 Nigerian banks. The dataset was being sold for $250,000 on the dark web forum, with fintechs also implicated in the leaked data.
Several banks and fintechs in Nigeria have suffered cyber attacks or fraud incidents in recent years, including:
- MTN, which lost $53 million from its mobile money service after a cyber attack
- Flutterwave, a fintech company, which has been implicated in alleged attacks leading to lawsuits against recipients of the funds and freezing the bank accounts of 295 others
Collaboration Against Fraud
The spate of cyber attacks and fraud has led to the creation of several groups to fight against fraud by sharing data, including:
- Project Radar, a member alongside other fintechs and eKYC firms
Improving Cybersecurity Regulation
According to the report, African financial institutions are becoming more willing to share incident risk data, fraud data, and data to enable interoperability of digital payments. However, only 15% of surveyed financial industry leaders consider how cybersecurity is regulated in Africa to be effective, with 74% calling for improvement and 11% saying they do not know or believe regulation is non-existent.
Optimism Amidst Economic Concerns
Despite concerns about the impact of poor economic outlook, banks, insurance firms, and other financial institutions remain optimistic about their business prospects. Only 15% of respondents predict that unfavourable macroeconomic conditions will persist over the next three years in Africa.