PROTEC-
TION AND
PRIVACY
CYBER SCAPE AFRICA | Q2
2019
OF DATA IN FINTECH
“The Unbanked Continent”
The advent of mobile communications
encapsulated in smartphone market penetration
has reduced the costs for telecommunication.
This cost-reduction has translated to an increase
in access for mobile payment systems, banking
services and recently, blockchain technology
through cryptocurrencies. But, this financial
inclusion through FinTech comes at risk because
there is little to no knowledge of the risks
associated with cybersecurity to the new
technology users especially the vulnerabilities of
their personal information and privacy.
From Algeria to Kenya to Nigeria to Zimbabwe,
various African nations have had to grapple with
different kinds of problems in their banking and
financial sectors. Corruption, corporate
malfeasance, economic mismanagement, fraud,
cyber threats, armed conflict and instability all
contribute to making Africa one of the most
unbanked continents in the world. This has given
Africa the moniker: “The Unbanked Continent”.
On the bright side, some headway is seen for
improvement particularly in the realm of Fintech.
According to the World Bank, statistics of the
number of unbanked adults in the world
decreased by 20%; that is from the 2011 estimate
of 2.5 billion persons to 2 billion in 2014.
The FinTech industry is rapidly growing. It grew
astronomically from roughly $15 billion in late
2016 to roughly $40 billion in 2018. In Africa,
there are hundreds of FinTech companies. The
pioneer of FinTech startup in Africa is the Kenyan
M-Pesa which grew its customer base to 17
million in 6 years. It currently provides services
across Africa, Europe, and Asia. Other prominent
startups include the MCash which is a replicate of
the Kenyan M-Pesa and was introduced in Nigeria
by Nigeria Inter-Bank Settlement System (NIBSS);
Piggyvest which is an online saving platform,
RenMoney which is also an online lending
platform, Remita, and Remitly for efficient online
transfers, and payments.
FinTech and Financial Inclusion
FinTech may be a disruption of the financial
services industry, but it is also akin to financial
inclusion. Financial inclusion is “the access to
institutional financial instruments and services
that can help individuals and businesses develop
economically.”
The World Bank considers increasing financial
inclusion as one of its main advocacies so much so
that it has established a goal for 2020 called
Universal Financial Access. This proposal aims to
increase access to formal financial institutions
and services all over the world in order to reduce
poverty and encourage economic growth.
There is still room for more startups to emerge
especially in the sphere of payment providers and
solutions. For instance, making payments or
providing account information via mobile devices
through the use of Dual-Tone Multi-Frequency
(DTMF) marking technology has not been
introduced by an African-based FinTech company.
Without access to formal financial services, an
individual or a business would not be able to
develop substantially and sustainably. They would
not have access to a savings account, credit
facility, insurance, and other financial
instruments.
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