Central Bank of Kenya (CBK) chairman Mohammed Nyaoga has cautioned banks to be wary of cyber risks in mobile money as the lenders move towards establishing their own transfer platform.
Mr Nyaoga said as banks embrace new technologies in provision of financial services, it is equally important that such innovations should deal adequately with the fast rising risks.
He said a number of consumer protection concerns have emerged in the sector, including the lack of safeguards for funds held by non-prudentially regulated providers.
Others are limited disclosure of fees, terms and conditions, irresponsible lending through the digital channels, and unclear or limited recourse in case of disagreement with the provider.
“The most significant risks currently relate to cybercrime and data privacy, even as customers navigate a landscape strewn with hidden risks,” said Mr Nyaoga during the official launch of Ecobank Kenya mobile app last week.
“It is essential that we ensure the innovations in the financial sector are conducted safely, without jeopardising financial stability and protecting consumers.”
The caution comes a few days after CBK gave six banks the green light to launch a mobile money transfer platform, a move set to highten competition in an laready crowded and lucrative financial services market segment.
The Kenya Interbank Transaction Switch, developed by the Kenya Bankers Association (KBA) will among other services facilitate real-time transfer of money between banks without going through mobile money transfer platforms.
The adoption of mobile money has raised the level of Kenya’s financial inclusion to 75 per cent from just from 26 per cent in 2006.
In addition, the network of mobile money agents has grown significantly, from 527 agents in June 2007 to over 165,000 in December 2016.
Last week, consulting firm Deloitte projected that cybercrime linked losses could hit new record this year.
Deloitte said it is estimated that cybercrime cost Kenyan Internet users and businesses about Sh18 billion ($171 million) last year.
Deloitte predicted that the cost of cybercrime could rise by as much as 30 per cent this year, as criminals take advantage of increased internet connectivity and user’ lax security measures.