Collaboration Key to Combating FinTech Fraud – Expert

African FinTech founders have been advised to work with the digital ID industry to stop the increasing incidents of fraud in their systems.

This was the summary of the discussions at the just concluded Digital Identity 7.0 webinar on the topic “Beyond Compliance: Building a stronger defense against FinTech fraud”.
The discussion is set against a reported increase in fraud in the African financial market which is expected to continue to increase as more people adopt electronic payment methods.

According to Esigie Aguele, Co-Founder/Managing Director of VerifyMe Nigeria, owners of QoreID, the archetype of building fraud-resistant systems in developed countries shows the need for stakeholder collaboration in priority areas such as reporting and sharing data on fraud, especially at the time of onboarding new customers .

He notes that while many African companies have adopted this approach on the credit side, the same needs to be replicated on the fraud side.

Aguele said: “FinTechs should embrace the digital transformation that is happening in the KYC space. Take QoreID for example. At the point of onboarding, we are really the only team that has the ability to establish the first trust transaction with the digital ID, as well as provide the customer more insight into risk assessment and location information.

“This data extends beyond the realm of our customers’ interactions with potential customers, allowing us to easily flag individuals’ criminal activities across our network of 150 FinTechs, 16 banks and 14 microfinance banks.

“Imagine if such a protocol were extended across the industry and supported by regulation? It will provide much-needed intelligence that will not only strengthen the risk assessment protocol, but ultimately prevent and reduce future instances of fraud. This is why we discourage FinTechs from spending so much engineering time trying to ramp up building KYC tech products that are not necessary for their core business when there are companies that can provide that service at a fraction of the cost,” he said.

Also speaking at the event, Stanley Jacob, Vice President, FinTech Association of Nigeria said: “Behavior tells everything when it comes to digital identity and fraud. Today, we have advanced fraud tools that continue to rely on devices and location. We are now trying to take care of robots.

“But we need to focus on behavior and behavioral biometrics to provide a rich layer of defense that can increase trust and deliver a better customer experience across digital channels.

“FinTech companies that have been suspected of fraud must rebuild trust by communicating effectively to stakeholders at all levels. Right now what we see more often is denials instead of effective communication. FinTechs must also close operational loopholes. They should carry out periodic internal and external vulnerability assessments and other relevant tests to have a clean bill of health. If the industry pays close attention to these two things, I think tensions will drop considerably.”

The Inside Identity webinar series is organized by QoreID, a digital identity and consumer data analytics infrastructure, in partnership with TechCabal, a leading African technology media outlet.

The panelists include Dr. Stanley Jacob, Vice President, FinTech Association of Nigeria; Anthony Onyango, Global Head of Credit, Lipa Later; Daniel Ade-Ojo, Fraud Intelligence Specialist, Moniepoint; Superintendent Henry Ayisi Mensah, District Police Commander, Onyisi, Eastern Region Ghana and Esigie Aguele, Co-Founder/Managing Director, VerifyMe Nigeria.