
Fintech has been on the rise across Nigeria’s financial
market within the past decade as the country’s population embraced payment,
mobile, and financial inclusion services. But if the financial services sector
has shifted gears towards digitizing everything it possibly can, then this
comes with a unique set of problems that were not previously seen by the
industry—especially the issue of cyber threats. With more persons in Nigeria
now adopting online banking, and mobile money among other Fintech solutions,
the risk for Cyberattacks remains inevitable.
In this blog post, we are going to look at the most
significant threats to Nigeria’s fintech businesses, consider how these threats
influence the industry, and advice for fintech companies managing these threats
for secure operations.
1. Data Breaches and Unauthorized Access
That brings us to one of the biggest security threats to
Nigerian Fintechs, which is data loss. Fintech platforms comprise a huge volume
of customers’ data that may contain personal details, financial data, and
transactions, among others. However, if a breach occurs, this information can
be seen by cybercriminals which will result in loss of money, identity theft,
and reduced customer trust.
It is also a best practice for every Nigerian fintech to
adopt the following measures as part of its data breach protection policy; data
encryption will be adopted and implemented for that information, multi-factor
authentications, regulated and restricted access to systems and information.
2. Phishing Attacks
Phishing techniques remain the most popular deceptive
methods used by hackers to perpetrate fraud on fintech enterprises. In Nigeria,
the trick usually comes in the form of emails or short messages that are
designed to lure the target into parting with their login details, or cash.
Once the attackers get into the system, they can move around in the accounts,
embezzle or otherwise siphon off funds, or report the data on the dark web
market.
Fintech firms are also required to engage their personnel in
training to educate them about phishing risks and also to educate their
employees and clients to avoid them. Hence, conducting thorough reinforcement
of the email filters and organizing secure communication could also hamper the
attempts of Nigerian phishing attacks in the sphere of fintech.
3. Mobile Banking Vulnerabilities
The availability of mobile banking in Nigeria has enhanced
the improvement of financial services, especially among the under-banked
population. But with the increased uptake of mobile money and banking apps,
there is always a high risk of cyber attacks. Laptops and especially mobile
devices are especially exposed to malware, SIM swapping and unauthorized
access.
To counter such threats, Nigeria’s Fintech firms have to
offer the bank via mobile devices security by incorporating end-to-end
encryption and updates into its apps and including biometric authentication
tools as well. Furthermore, there is a need to raise awareness among users
regarding their mobile devices' passwords and avoid using unfamiliar Networks
Wi-Fi.
4. Digital Payment Fraud
The security of digital payments is a critical issue in
Nigeria’s fintech business. The attribute is an appeal to criminals who attempt
to hijack transactions or take advantage of vulnerabilities in the system to
get unauthorized access to money. As the usage of contactless payments and
e-shops rises, fintechs need to pay a visa to fraud.
The use of biometrics especially in tracking patterns of
transactions and issuing alerts when they notice suspicious transactions is
crucial when dealing with digital payments in Nigeria. Furthermore,
tokenization that involves the substitution of some forms of payments, for
example through the use of cards, means that online payments can be a little
more secure.
5. Ransomware Attacks
Ransomware attacks are on the rise, especially in the
financial sector, fintech inclusive. Organized intruders deny users access to
important systems or data, or lock that information within a program, and then
demand a payment—usually, in Cryptocurrencies—to release it. As it has been
observed, such disruptions are capable of producing financial and reputational
impacts on the operations of fintech companies.
The best way to combat ransomware is to have a rigorous
backup system in place for all the data that a fintech organization handles;
backups have to be maintained off-site and up-to-date. Also, new technologies
of endpoint detection and response can prevent ransomware attacks and eliminate
threats before they become active.
6. Third-Party and Supply Chain Risks
Most fintechs also depend on third-party service providers
including cloud solutions, payment facilitators, and software solutions
providers. However, these partnerships create new supply chain risks that
threaten the security of fintech activities as a whole. Holding data with a
third party exposes fintech companies to risks that are outside the area of
direct control.
Third-party risks must, therefore, be minimized by Nigerian
fintech firms performing vendor risk assessments to guarantee compliance by the
partners with good cybersecurity policies. Other are clear legal relations and
roles and responsibilities in the supply chain regarding cybersecurity, audits
and continued monitoring as well.
7. Regulatory compliance problems
With the advance of fintech in Nigeria, there is a need for
close adherence to cybersecurity standards. In the recent past, the Monetary
Authority of Nigeria commonly known as the CBN has issued various policies
towards the sector to enhance the security of the streams. Noncompliance with
these practices exposes organizations to considerable penalties as well as
legal actions and a tarnished image.
Fintech firms must also ensure that they adhere to the
various regulatory requirements that apply to it and this is by ensuring that
they become aware of the latest cyber security laws and regulations. Contacting
cybersecurity specialists and other consultants can significantly help the
company perform through the legislation and maintain the necessary security
level.
8. Distribution Denial of Service (DDoS) attacks
Another risk in Nigeria is the Distributed Denial of Service
(DDoS) attacks on the fintech platforms. These attacks inundate a website or a
specific platform with too much traffic so that the site either becomes slow or
even unresponsive. The likes of fintech firms that heavily rely on real-time
transactions are on the receiving end as DDoS attacks cost them huge losses and
greatly affect their brand.
How does one protect oneself from DDoS attacks Fintech firms
can employ the use of modern, efficient and secure web application firewalls
(WAF) as well as cloud-based solutions that offer the scalability to handle the
volumes of traffic. Also, having an effective incident response plan in place
helps ensure the companies’ ability to rebound from such assaults.
Conclusion
That is why as Nigerian fintech companies continue to push
the agenda of financial inclusion and innovation, it is imperative to underline
the need to have a good cyber security system. Cyber attackers find industries
a rich hunting ground for growth and the aftermaths of a cyberattack are always
disastrous for enriching the company’s loss both in terms of money and
reputation.
To counter these risks, Nigerian fintech firms must take
novel measures to bolster cybersecurity investment in new generation technology,
awareness among employees as well as levels of industry regulation. To reduce
possible threats that can hinder the future of Nigeria’s fintech, it is
necessary to focus on four critical threats including data breaches, phishing
attacks, and mobile banking threats.
Concerning the current and future state of the online world,
the protection of customer information, security of online transactions, and
trust all play an important role in the survival of such business models.
Fintech firms that invest in cybersecurity will prevent risks that might bring
the downfall of their business and create a competitive advantage that
encourages the user’s trust, enhancing financial technology in Africa.