- Daily Nation
Kenyans are at high risk of losing money through banking fraud owing to mobile banking that has grown from a mere 14 per cent in 2009 to 84 per cent in 2022.
In a report released Thursday, August 4, Kenyans who reported to have lost money through fraud accounted for 6.1 per cent for mobile bank users, 25.9 per cent for mobile money users and 6.8 percent for bank account users.
The Kenya Financial Sector Stability Report also shows that 34.5 per cent and 25.9 per cent of bank account holders attributed the loss of their money to inside job in these financial institutions and phone-related fraud respectively.
"These have implications on consumer confidence and overall financial stability," warned the government.A display of a phone showing Money transactions on PhoneCapital Group
Rapid adoption of mobile money has been categorized as disruptive in the financial services provision. It has, however, come with new risks and raised consumer protections issues, with implications on financial stability risks.
According to National Kenya Computer Incident Response Team Coordination Centre (NCIRTCC), there were 158.4 million cyber threats through June 30, 2021, up from 110.9 million in 2020 same period. NCIRTCC is mandated to coordinate response and manage cybersecurity incidents.
So far, mobile money providers have 27.1 million active customers, up from 25.7 million in 2020, representing 5.3 per cent growth in new customers.
This is attributable to the increased internet penetration, uptake of e-commerce and cloud-based services to support remote working and increased social media use.
Some of financial institutions that have been implicated in money fraud are based in Nigeria, Africa's most largest economy.
Recent landmark ruling by High Court on July 1 ordered that over Ksh6.2 billion cash stashed in 62 bank accounts belonging to Flutterwave, a Nigerian-based start-up, be frozen.
“Investigations established that the bank accounts operations had suspicious activities where funds could be received from specific foreign entities which raised suspicion. The funds were then transferred to related accounts as opposed to settlement to merchants,” the Asset Recovery Authority (ARA) told the court.
In a statement, Flutterwave dismissed claims of financial improprieties involving the company in Kenya, adding that it has records to prove the legitimacy of its business.
"Through our financial institution partners, we collect and pay on behalf of merchants and corporate entities. In the process, we earn our fees through a transaction charge, records of which are available and can be verified.
"As a business, we hold corporate funds to support our operations and provide services to all our customers," the statement read in part.
Even though traditional banking remains safe mode of banking, the use of cards to swipe has dwindled on the risk of skimming when unscrupulous merchants swipe their cards, exposing their accounts to fraudsters, hence the general reluctance among some to use them for payments.The CBK pension towers located in Nairobi CBDCBK
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