By Cynthia Ezekwe
The financial landscape has transformed significantly over the past decades, with financial technology companies called fintechs emerging as disruptive forces that have revolutionised traditional financial services.
Fintech encompasses mainly innovative technologies, including blockchain, artificial intelligence, cloud computing and mobile applications, transforming how financial transactions are conducted, processed, and managed. These technologies have brought about significant efficiency, cost-savings and expanded access to financial services, making them popular among customers and businesses, and of course this helps us to deepen our financial objectives.
Consequently, the need for robust cyber security measures has become paramount as the finance industry continues to embrace technological advancement and digital transformation.
However, there are many new challenges that this development has brought to the table. The increasing reliance on digital technology and interconnected systems has exposed financial institutions and consumers to new and evolving cyber threats.
To this end, Musa Itopa Jimoh, the director, payment system management department, Central Bank of Nigeria (CBN), has emphasised the adoption and integration of cyber security in ensuring the integrity, safety and trustworthiness of Nigeria’s financial systems.
Speaking at the 2023 FinTech CyberSecurity & Fraud Summit held recently at the Civic Centre, Victoria Island, Lagos, Jimoh examined the challenges and opportunities presented by the evolving fintech digital economy, and the severe consequences of cyber attacks on the operation of financial institutions.
In his words, “Within this changing landscape, regulators and policy makers are grappling with the need to balance innovation and regulation to ensure the stability, the integrity and the security of the financial system.
Therefore, regulatory framework and guidelines are being updated to keep pace with the rapidly growing fintech landscape. Cyber security has emerged as a critical component of this regulatory system, increasing emphasis on the need for robust cyber security measures to protect financial systems, data operators, and even the consumers.
So, fintech companies are being held to high cyber security standards, it is very mandatory that we keep the parameters of our financial and payment system infrastructure well protected.”
The CBN director, who spoke on the theme, “The Role of Cyber Security in an Evolving FinTech Regulatory Digital Economy”, emphasised that the role of cybersecurity in the evolved fintech digital economy is multi-faceted and encompasses various dimensions.
The financial technology expert identified cyber security measures such as encryption, multi-factor authentication, access control, as some of the crucial tools in safeguarding customer details and transactions against unauthorised access, breaches, and identity theft.
He noted that cybersecurity measures such as payment gateway, fraud detection algorithm,and blockchain can provide enhanced security and transparency in financial transactions, making them a promising tool in the fight against financial crime.
Speaking on the role of government regulations in strengthening cyber security, he said, “You know most times when the regulators ask you to comply with certain standards and regulations, it is usually seen as the regulator being very hard on the operators or the customers. But the fact is that we do these things to protect you . We are sitting on ample information that gives us the power to see what is happening within the ecosystem, so anytime the regulator asks you to comply with certain regulations, don’t see it as a directive that stunts growth.”
Jimoh said that the CBN has taken some relevant measures aimed at protecting consumers from cyber criminals. Going into specific regulation systems, he recalled that the apex bank set up a fraud forum called the Nigerian electronic fraud forum in 2012. He explained that the objective of the forum was to provide an avenue where all the financial operators, and the payment service providers will come together and deliberate on what is happening within the financial system, identify the kind of threats around the system, understand what the global trend is, and ensure that accurate information is being shared to protect consumers from being hit.
He noted further that the CBN has also directed the operation of the Security Operating Centre (SOC) with the basic objective of protecting financial institutions, adding that the centre has a coordinated approach to protecting infrastructure of financial institutions, as well as protecting customers, and safeguarding the entire institution’ s assets.
According to Jimoh, the CBN is pivotal in advancing the evolving fintech landscape by promoting best cyber security practices.
“The CBN regulatory framework, enforcement action, information sharing, capacity building, and innovation support contribute to ensuring a trustworthy ecosystem. By ensuring robust cybersecurity measures the CBN safeguard integrity, and stability of the digital economy , which is essential for a sustainable growth of the fintech industry in Nigeria,” he said.
Jimoh also encouraged financial institutions and fintech organisations on the need to promote capacity building and awareness. He observed that one of the reasons customers are easily defrauded is because they are neither aware nor do they understand some of the cyber security tools.
“So, it is very important that we educate them; that we let them know what it means by two-factor authentication. We let them know what it means to protect their pin; we let them know why they can’t give their cards to their wards, relatives etc. to do transactions on their behalf,” he added.
He further highlighted the need for players in the fintech sector to encourage innovation, noting that it brings about new ideas that not only deepen financial inclusion, but also promote and help devise the kind of protection needed around the fintech systems.
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