TBEN are at high risk of losing money to bank fraud as a result of mobile banking which has grown from just 14 percent in 2009 to 84 percent in 2022.
In a report released on Thursday, Aug. 4, TBEN who reported losing money to fraud accounted for 6.1 percent for mobile bank users, 25.9 percent for mobile money users and 6.8 percent for users of bank accounts.
The Kenya Financial Sector Stability Report also shows that 34.5 percent and 25.9 percent of bank account holders attribute the loss of their money to an internal job with these financial institutions and phone-related fraud, respectively.
“These have implications for consumer confidence and overall financial stability,” the government warned.
A view of a phone with money transactions on the phone
Rapid adoption of mobile money has been categorized as disruptive in the financial services industry. However, it has introduced new risks and raised consumer protection issues, with implications for financial stability risks.
According to the National Kenya Computer Incident Response Team Coordination Center (NCIRTCC), as of June 30, 2021, there were 158.4 million cyber threats, up from 110.9 million in the same period in 2020. NCIRTCC is mandated to coordinate response and manage cybersecurity incidents. .
To date, mobile money providers have 27.1 million active customers, up from 25.7 million in 2020, representing a 5.3 percent growth in new customers.
This is due to increased internet penetration, the rise of e-commerce and cloud-based services to support remote working and the increased use of social media.
Some financial institutions that have been involved in money fraud are based in Nigeria, Africa’s largest economy.
Recent landmark Supreme Court ruling on July 1 ordered that more than Ksh6.2 billion cash in 62 bank accounts of Flutterwave, a Nigeria-based start-up, be frozen.
“Investigations have revealed that the transactions in the bank accounts had suspicious activities that could involve receiving funds from specific foreign entities that aroused suspicion. The funds were then transferred to related accounts rather than settlement with merchants,” the Asset Recovery Authority (ARA) told the court.
In a statement, Flutterwave rejected claims of financial wrongdoing involving the company in Kenya, adding that it has data to prove the legitimacy of its company.
“Through our financial institution partners, we collect and pay on behalf of merchants and business entities. In the process, we earn our fees through transaction fees, the data of which is available and verifiable.
“As a company, we hold corporate funds to support our operations and provide services to all of our customers,” the statement reads in part.
While traditional banking still remains a safe method of banking, the use of cards for swiping has declined due to the risk of skimming when unscrupulous merchants swipe their cards and expose their accounts to fraudsters, hence the general reluctance among some to use them for payments.
The CBK Pension Towers in Nairobi CBD