African Banks are tackling online fraud on their own
Despite the rising threat of identity theft and Internet scams, the banking industry regulators have for long been asking lenders to handle electronic banking security themselves. With this in mind, banks across sub saharan Africa are setting up an organisation to handle online security that is threatening their businesses.Banks in Africa have for long been concerned about online banking fraud but has refused to step in, citing a lack resources needed to catch up with new technology.Some thought it would be better if the industry regulators dealt with the technology itself. However, central banks in Africa are only there to establish the general rules.They do not want to get involved too much in technological issues because they change so fast.Some are willing to embrace technology but most of them are managed by dinosaurs. On the other side, Contador Harrison thinks if central banks in Africa majority of whom are not independently run became too much involved in online regulations, banks would only do enough to comply with their regulations, rather than continuously improve their own security.With the central banks across the region taking a back seat, the proposed self-regulating body will be responsible for hammering out the details of online banking security in member states and work with relevant security organs to bring the criminals to book.
Many industry stakeholders hope that if the proposed new body comes to fruition, they hope that banks will able to respond to security challenges quickly and with an optimist involved in the negotiations informing that it could be launched by the end of next year. Although I got no specific details about the new regulator, a reliable source informed me that local banking associations across sub Sahara and Internet service providers supported the plan.Customer concerns in Africa have been on the rise as online banking crimes proliferate with suspects being apprehended every now and then from stealing bank card information by infiltrating a banking data system on the Internet to ATM cards cloning. African banks are increasingly favoring online services as they look to cut costs.For example, a study by an American research company revealed that online transactions in Africa typically cost banks only 9 percent of what in person transactions cost, and some even provide online transactions for free due to the low overhead. Banks in the region are aggressively expanding their Internet business in a bid to improve convenience and boost customer loyalty. Online banking is not aimed at generating revenue for the banks in Africa but they are more about customer convenience and creating loyalty. Security was one of the banking industry priorities as it anticipated a huge number of customers switching to online services as banks try to wrestle the business from mobile money platforms and customers are increasingly favoring online banking and is projected to grow even faster in the future.