Credit Management
The Underbanked Need Protection From Fraud And Scams
By Wasilwa Miriongi
There have been a number of methods of fraud detection in place that are not proving to be effective in protecting the unbanked and underbanked population therefore calling for a much more careful approach .
There is no gainsaying in the fact that there has been a global push for financial inclusion that has led to the development of innovative financial products designed specifically for the unbanked and underbanked population . These individuals , who have traditionally been excluded from the formal financial system , are now gaining access to a range of services , including bank accounts , e-wallets , pre-paid cards , loans , and digital payment platforms .
While this progress is undoubtedly positive , it also exposes these vulnerable groups to new and unique fraud risks . Kenyans have been exposed to a large extend to mobile money , which has made financial services accessible to millions .
Maybe the question on your mind is what does it mean to be underbanked ? The underbanked households are those that do have a bank account but have to rely on nonbank financial services for certain banking needs , such as getting loans or mobile money . The latest World Bank Global Findex Report notes that around seven million Kenyan adults , especially women and the poor , remained on the periphery of the financial system . As more citizens grapple with escalating living and healthcare costs , the situation is compounded by a decline in financial health as Kenyans face ongoing daily financial management challenges .
The fraudsters have a way of exploiting any vulnerabilities in the system , and the unbanked and underbanked population is particularly susceptible due to a combination of factors , including low financial literacy , lack of financial
As the world continues to digitize and more people gain access to formal financial services , institutions that prioritize these areas will be well-positioned to drive greater growth through financial inclusion , while protecting their customers and their bottom line from the evolving threat of fraud . It is now up to mobile money companies and banks to keep people ’ s money safe .
education , and limited experience with formal financial services . As the country and the world at large work towards expanding financial inclusion , it is crucial that priority is given in protecting these individuals from fraud and financial exploitation not only through existing strategies , but also through new , innovative and custom solutions .
It is a known fact that scammers target apps and services that are easy to use . “ Now , identity fraud has gotten so bad that they ’ re even stealing from the dead too ” quoting one fraud detective . It is undisputable to say that many people in this country have experienced a fraud in the process of using mobile money , mobile bank account , or digital loan apps in the last one year period .
The challenge of balancing growth and fraud protection stems from the rapid expansion of real-time payments , digital banks and payment service providers that has brought new opportunities for financial inclusion , but it has also raised concerns about the prioritization of growth over fraud protection . As these institutions focus on acquiring new customers and increasing market share , there is a risk that they may overlook the importance of robust fraud prevention measures .
The Constitution of Kenya and the Consumer Protection Act 2012 place a high premium on the rights of consumers of goods and services . This lays emphasis on the rights and responsibilities of consumers in terms of access to information as well as standards of service delivery . This should be taken seriously by any organisation that strives to provide first class service including digital banks
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