Commerce is the lifeblood of any economy, driving the circulation of goods, services, and value in general.
For decades trade has been restricted to in-person interactions that enabled those transacting to get a general sense of who they are doing business with.
A transaction could close or fail based on several factors, some of which may touch on the physiological, such as a hunch. Enter technology. From the invention of the telegraph, the telephone, and the Internet with all the digital transformation enabled, and on to new financial instruments, the need for physical interaction when conducting business has been reduced.
This trend will continue as we chase efficiency and convenience. One critical element suffers, introducing friction.
The erosion of trust, brought about by distance and facelessness, paves the way for increased activity from bad actors.
These individuals inflict financial loss and erode confidence in the technologies, systems, and platforms designed to create value. Regulatory technology (RegTech) stacks are gaining momentum as commercial interactions digitalise.
Critical sectors such as financial services and healthcare are first movers as regulatory monitoring, reporting, and compliance are embedded practices. We currently fall woefully short where our accessible RegTech primitives start and end with confirmation of government-issued identity on the Integrated Population Registration System, a collection of registries from various State entities and the Business Registration Service, the sole custodian of the list of all companies and information for entities registered in Kenya. As millions of small and medium-sized businesses come online with consumers in tow, increased data breaches, cyber incidents, money laundering risk, and other fraudulent activities must have us look critically at democratising access to RegTech and enriching available metadata in near real-time. The ease with which one can acquire and use alternate identities presents the greatest risk, compromising the single source of truth we are to rely on as a baseline.
It inadvertently exposes every value chain player in different industries and sectors. The key incentive for bad actors is always monetary. I believe financial services players who handle money in transit and rest can drive the transformation we need to see in our RegTech space.
We must urgently explore enhanced due diligence as a platform to enable businesses to go beyond know your customer basics.
It is a challenge that may not have a champion to see it through. Most organisations with the capability would be inclined to a siloed approach.
It takes considerable time, effort, and capital to have enriched first-party data. The downside of maintaining silos is that we are inevitably engaging in countless invisible battles against fraud from common perpetrators.
We must recognise the gravity of this challenge and its implications. We have a practical opportunity to deliver a decisive blow to the most significant obstacle to commerce and trade at scale. Njihia is head of business at Safiri Express | www.mbuguanjihia.com | Twitter: @mbuguanjihia
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