CybersecurityConcernsinDigital Finance: The Ghana Perspective
Discussing the growing importance of cybersecurity in the context of increasing digital transactions and the protection of consumer data.
By: Dr Philip Takyi (DBA) Date: 4th January 2024 Financial Security – Dr Takyi 2
About the Author
A renowned Financial Security Expert, a Doctoral product, SBS Swiss Business School, Zurich, Switzerland of Business Administration, and an Executive MBA candidate of Cybersecurity at Ottawa University in the United States of America. I have acquired two (2) decades of specialization in financial planning and advisory, risk management and cybersecurity.
Over the period, I have had experiences in financial greenfield projects, working with various institutions and stakeholders to improve access and quality of financial products and services for lowincome and underserved individuals in Sub-Saharan Africa and Latin America.
I have held senior leadership positions in microfinance banks, savings and loans companies, and social enterprises, where I have led teams, projects, and initiatives to expand market reach, develop new products, and deploy alternative delivery channels.
I have also provided technical and operational support and advice to regional and global networks and partners. At the helm of FINCA – USA (Nigeria subsidiary) as CEO, and as an influential figure within ACCION International, USA, I demonstrated prowess in international development initiatives. My endeavors in these institutions were characterized by the cultivation of substantial social capital, extending both quantitatively and qualitatively. Financial Security – Dr Takyi 3
HONORS, MEMBERSHIPS AND AWARDS ACCION Microfinance Bank, Nigeria Nov 2013 Best Microfinance Bank of the Year, Lagos State Enterprise Award Role: The Resident Advisor (Management) FINCA Microfinance Bank, Nigeria Nov 2015 Best Microfinance Bank of the Year, Eastern Nigeria Merit Award Role: Chief Executive Officer Enhancing Financial Innovation and Access (EFInA) Oct 2016 Role: Chief Executive Officer – FINCA Nigeria Title of Grant: Technical Assistance Grant $1M– Agency Banking Network Develop agency banking network to ensure convenient and secure financial services to the unbanked, especially women.
Award of Doctoral Fellow Membership in Financial and Investments Analysis Nov 2021 Topic: The Role of Microfinance in Promoting Entrepreneurship in Ghana Title: Fellow of the Chartered Institute of Financial and Investment Analysts, Ghana Award of Fellowship Membership in Leadership and Governance Jan 2022
Title: Fellow of the Chartered Institute of Leadership And Governance, New Mexico, USA Title: Distinguished Leadership Award in recognition of excellence, un-ending Nov 2023 Outstanding support to the growth and development of leadership in the Financial inclusion sector of Ghana (Chartered Institute of Leadership and Governance)
Dr Philip Takyi (DBA, MABR, DF.CFIAG, FCILG, MIODs, FICA) www.linkedin.com/ in/drphiliptakyi2020 Financial Security – Dr Takyi 4 Introduction This article seeks to examine cybersecurity concerns in the context of digital finance in Ghana, particularly using mobile money, and providing valuable insights into the challenges and strategies needed to ensure a secure financial ecosystem. The stability of the financial system is directly linked to the security of digital finance. Cybersecurity breaches, if not effectively managed, can undermine trust in financial institutions and disrupt the overall stability of the emerging digital financial ecosystem in Ghana. Individuals and businesses using digital financial services entrust their assets and sensitive information to these platforms.
Cybersecurity measures are essential to protect customers from financial loss, identity theft, and other fraudulent activities. Ghana, like many developing economies, has been actively working towards financial inclusion.
Mobile money and digital finance for example, play a crucial role in reaching unbanked and underbanked populations. Cybersecurity concerns, therefore, if unaddressed, could hinder efforts to bring more people into the formal financial system. A secure digital finance environment contributes to economic development by fostering innovation, attracting investments, and supporting the growth of fintech companies. A compromised cybersecurity posture could deter these positive economic i m p a c t s . Financial Security – Dr Takyi 5
The Broader Inclusive Perspective – FinTech
Fintech, as you may be aware of, abbreviated for financial technology, refers to the use of technology to improve and automate traditional financial services and processes. This includes a variety of products and services such as online banking, mobile payments, peer-to-peer lending, digital wallets, and financial management tools. Earlier attempts by traditional banks and the government of Ghana to include many financially through ICT infrastructure investments had failed because of issues of scalability (Haruna, 2012). Consequently, overcoming this challenge was crucial for the next innovation in the financial landscape. MTN Ghana achieved this feat through mobile phones. Although ICT had been introduced in the banking landscape of Ghana years earlier, the real financial technology era, as I may call it, began in 2009, with the introduction of mobile money. FinTech through ICT infrastructure hadbecometheanswertoreducingthe financial exclusion gap in Ghana. Consequently, aside from the other players, government regulations had become a necessary piece of this jigsaw
puzzle. The current regulations instituted by the government provide a fair playing field for all FinTech players (Shim and Shin, 2016; Lee and Shin, 2018).
Fintech companies often use advanced technologies such as artificial intelligence and blockchain to create new financial products and services that are more efficient, accessible, and user-friendly than traditional financial institutions.
The Fintech market referred to includes startups, established financial companies, and other companies that use technology to disrupt and innovate in the financial services industry.
In an attempt to define the FinTech ecosystem in Ghana, there are five markets in the Fintech space in Ghana made up of digital payments, digital investments, digital Financial Security – Dr Takyi 6 capital raising, digital assets, and neo banking. The market for digital payments includes digital trade transactions, mobile point-of-sale payments, and digital transfers. Digital investments have included robo-advisors and neo brokers. Digital capital also consists of raising crowdfunding, crowd investing, crowd lending, and marketplace lending. The market scope for digital assets comprises of cryptocurrencies, NFTs, and DeFi, and the neo banking segment focuses on digital banks (https://www. bankofghana.gov.gh/). The fintech market in the country is rapidly evolving, with digital payments, digital investment, digital capital raising, digital assets, and neo banking emerging as some of the most significant trends. Digital payments have seen an unprecedented surge in popularity, with consumers increasingly relying on mobile payment solutions for their day-to-day transactions.
Digital investment platforms are also gaining traction, with individuals seeking low-cost and easy-to-use investment options. Additionally, digital capital raising has gained the attention of startups and SMEs, as it provides an efficient way to access funding. The rise of digital assets, such as cryptocurrencies and NFTs, has also created new opportunities for investors and traders.
Finally, neo banks have disrupted the traditional banking industry by providing innovative, customer-centric solutions that cater to the needs of today’s digital-savvy consumers (Doe, J., 2019).
The Fintech sector in Ghana has witnessed unprecedented growth in in the last decade, driven by a combination of factors such as increased internet penetration, mobile technology adoption, and a vibrant startup ecosystem. This transformation has led to new opportunities for businesses and individuals, as well as challenges for regulators seeking to maintain a balance between innovation, consumer protection, and financial sector goals. The industry has gained significant dynamism with startups focusing on various aspects of financial technologies.
These innovations include digital lending, payment solutions, and blockchain applications. The growth in the fintech market is driven by several factors. Firstly, the increasing adoption of smartphones and the internet as earlier indicated has made digital solutions more accessible to consumers, leading to a surge in demand for fintech services. Secondly, the COVID-19 pandemic has accelerated the shift towards digital payments and investments, as consumers have had to adapt to remote and contactless transactions. Coupled with that, regulatory changes have enabled fintech companies to compete with traditional financial institutions on a more level playing field, and finally, advancements in technology, such as AI and blockchain, have opened new possibilities for fintech innovation, driving further growth in the market.
The fintech market is expected to continue its rapid growth trajectory into the years, driven by ongoing technological advancements, changing consumer behavior, and regulatory support. Digital payments are likely to remain a dominant trend, as consumers increasingly prefer the convenience and speed of mobile payment solutions. Digital investment platforms are also expected to grow in popularity, as more individuals seek to manage their finances online.
The rise of digital assets and neo banking is likely to continue, as these trends reshape the financial landscape. Overall, the fintech market is expected to remain dynamic and innovative, with new solutions and services emerging to meet evolving consumer needs. Digital Payments – The Expected Future Fig. 1 Fig. 2 Total transaction value in the Digital Payments market is projected to reach US$7.10bn in 2024.
Gross total transaction value is expected to show an annual growth rate (CAGR 20242027) of 17.47% resulting in a projected total amount of US$11.51bn by 2027. The market’s largest market is Mobile POS Payments with a projected total transaction value of US$5.30bn in 2024.
From a global comparison perspective, it is shown that the highest cumulated transaction value is reached in China (US$3,694.00bn in 2024). Digital Capital Raising – The Expected Future Fig. 3 Fig. 4 Source: https://www. bankofghana.gov.gh/ Total transaction value in the Digital Capital Raising market is projected to reach US$324.50m in 2024. Total transaction value is expected to show an annual growth rate (CAGR 2024-2027) of 2.22% resulting in a projected total amount of US$346.60m by 2027.
The largest market is Marketplace Lending (Consumer) with a projected total transaction value of US$323.40m in 2024.
From a global comparison perspective, it is shown that the highest cumulated transaction value is reached in the United States (US$35,370.00m in 2024).
The Mobile Money perspective Ghana has experienced significant growth in mobile money services over the years, with widespread adoption among the population. Mobile money platforms such as MTN Mobile Money, Vodafone Cash, and AirtelTigo Money play a crucial role in financial inclusion. Mobile money was first launched in Ghana in 2009 by MTN.
Uptake has increased quickly since then, and by March 2019 there were 12.7 million active mobile money accounts in existed Ghana. Mobile money has become very popular as people do not want to make long queues in the bank to withdraw money from banks.
Total mobile money transactions for the first four months of 2023 surpassed ¢550 billion, about 66.2% year-on-year growth, data from the Bank of Ghana has revealed.
This is compared with ¢331.2 billion recorded during the same period in 2022. The total mobile money transactions for 2023 is expected to exceed ¢1 trillion. According to the May 2022 Summary of Economic and Financial Data by the Bank of Ghana, Mobile Money transactions in January 2023 were estimated at ¢130.1 billion, compared with ¢76.2 billion during the same period in 2022. It surged to ¢134.0 billion in February 2023 (February 2022: ¢76.5 billion) and subsequently to ¢147.5 billion in March 2023 (March 2022: ¢90.5 billion). It however fell to ¢138.8 billion in April 2023 (¢87.7 billion).
Telecom operators such as MTN, Vodafone, and AirtelTigo have played a significant role in establishing and expanding mobile money services in Ghana. Mobile money platforms, including MTN Mobile Money and Vodafone Cash, have gained widespread adoption. Mobile money has been instrumental in increasing financial inclusion, providing a convenient and accessible way for individuals, especially those in underserved areas, to conduct financial transactions, savings, and payments.
A network of mobile money agents has been established across the country, allowing users to deposit and withdraw cash, pay bills, and transfer money easily. This physical presence enhances the accessibility of mobile money services. Notwithstanding its issues, the Ghanaian government has recognized the importance of mobile money in advancing financial inclusion and has supported initiatives to promote its usage.
Key concerns - Cybersecurity related The Bank of Ghana’s (BOG) fraud statistics for 2021 indicated an alarming rate for cyber fraud. A total of GHC 114M is reported to be involved in fraud cases in the country. Out of this, 45.61% was recovered and the rest lost to fraud. According to “The Race to Adopt”, an annual global security report, the financial sector continues to be targeted by financially motivated organized crime, which often takes the form of data breaches, identity-based threats – malware, Ransomware, phishing, and social engineering attacks – and hacking, using stolen credentials.
Globally, the survey also reveals the hugely damaging effects of financially motivated organized crimes, with businesses losing more than 10% of their revenue in 2021. Beyond financial damage, network outages of 35%, compromised customer accounts of 29%, and data loss of 28% were among the key dangers making up a complicated threat landscape (Johnson, M. B., 2016).
With the dominance of mobile money, there is a corresponding increase in digital transactions. This makes the sector an attractive target for cybercriminals seeking to exploit vulnerabilities and gain unauthorized access to funds or sensitive information. Cyber threats such as phishing attacks and social engineering attempts may target mobile money users. Criminals often attempt to trick individuals into revealing personal information or mobile money PINs (Personal Identification Numbers) through deceptive means.
Mobile money operators and financial institutions in the face of these threats have likely implemented various fraud prevention measures, including two-factor authentication, transaction monitoring, and user education to mitigate cybersecurity risks. The regulatory environment in Ghana may have specific cybersecurity regulations and guidelines for financial institutions and mobile money operators. Compliance with these regulations is crucial for ensuring the security of digital financial transactions. Mobile money operators may collaborate with cybersecurity agencies and law enforcement to address and respond to cyber threats. Timely reporting of incidents and sharing threat intelligence are essential components of this collaboration. User awareness and education programs may have been implemented to educate mobile money users about cybersecurity best practices, including safeguarding their PINs, recognizing phishing attempts, and using secure devices. Mobile money providers invest in secure technology infrastructure, including encryption protocols, secure servers, and robust mobile applications, to protect customer data and transactions, these may require further studies to corroborate. Cybersecurity fraud alerts Malware, one of the principal fraud vectors, is utilized by cybercriminals to obtain unauthorized access, erase files, and steal sensitive data. Ransomware on the otherhand, a type of malware, is used by hostile actors or fraudsters to encrypt the data of victims and demand money to decrypt them. Due to the complexity and challenges of its limitation and mitigation, ransomware poses a significant threat to most businesses. Social engineering scams, the most prevalent of all cyber fraud vectors, are used by cyber fraudsters to manipulate individuals’ emotions to expose their personal information. Phishing Attacks, Cybercriminals may attempt to trick users into providing sensitive information through deceptive emails, messages, or websites, posing as legitimate fintech platforms. Data Breaches, Unauthorized access to and theft of sensitive customer data can occur, potentially leading to identity theft, fraud, and financial loss.
Mobile Money Fraud, as mobile money services become more popular, cybercriminals may target users with various fraud schemes, including SIM swapping, unauthorized transactions, and account takeovers. Insufficient Encryption, weak or insufficient encryption measures can expose sensitive financial data, making it vulnerable to interception by malicious actors. Regulatory Compliance Risks, failure to comply with cybersecurity regulations and standards can expose fintech companies to legal and regulatory risks, including fines and penalties. API Security Concerns, application Programming Interface (API) vulnerabilities can be exploited by attackers to gain unauthorized access to systems, potentially compromising user data. Third-Party Risks, fintech companies often collaborate with third-party service providers. Cybersecurity risks can arise if these third parties have inadequate security measures. Lack of User Awareness, insufficient awareness among users about cybersecurity best practices can contribute to vulnerabilities, such as weak passwords or falling victim to social engineering attacks. Operational Disruptions, cyber-attacks can disrupt fintech operations, causing financial losses, reputational damage, and impacting the availability of services to users. Conclusion In summary, the importance of addressing cybersecurity concerns in digital finance in Ghana is rooted in safeguarding the financial well-being of individuals and businesses, promoting economic development, and maintaining trust and confidence in the financial system. It requires a coordinated effort from government agencies, financial institutions, and other stakeholders to establish and maintain a resilient and secure digital finance ecosystem.
To address these cybersecurity threats, fintech companies in Ghana need to prioritize robust cybersecurity measures; regularly update their security protocols; educate users on best practices; and collaborate with regulatory bodies to ensure compliance with industry standards. Cybersecurity should be an integral part of fintech innovation to build trust and maintain the integrity of the financial services offered. Additionally, establishing effective incident response and recovery plans is essential. Financial institutions should be prepared to respond promptly to any cybersecurity incidents, mitigate damage, and recover systems to ensure minimal disruption to financial services.
The Ghanaian government has shown interest in promoting digital finance and financial inclusion. Policies and initiatives may include efforts to enhance regulatory frameworks, infrastructure development, and digital literacy programs. The regulatory environment for digital finance has likely continued to evolve, with authorities working to strike a balance between fostering innovation and ensuring consumer protection. Regulatory measures may include licensing requirements for fintech companies and guidelines for secure digital transactions.
Given the increasing digitization of financial services, the landscape’s security aspects would be crucial. Cybersecurity measures, regulations, and industry collaborations must be put in place to safeguard digital financial transactions. Efforts to enhance digital literacy and educate the public about the benefits and risks of digital finance could be ongoing. This may involve public awareness campaigns and educational programs.
Finally, global trends in financial technology, such as the rise of decentralized finance (DeFi), artificial intelligence (AI) applications, and blockchain, may have influenced the digital finance landscape in Ghana. Collaborations with international organizations and financial institutions to leverage global best practices, share experiences, and attract investments in the digital finance sector would be ideal. Ghana may collaborate with other countries, international organizations, and cybersecurity experts to share information and strategies to counter cyber threats in the financial sector.
This article serves as one of the key bases for a longitudinal explorative study into further study on the growing importance of cybersecurity in the context of increasing digital transactions and the protection of consumer data in Ghana and globally.
Financial Security – Dr Takyi 1 7 References Digital Finance Report 2020. Bank of Ghana. https:// www.bankofghana.gov.gh/ Doe, J. (2019, July 15). Strategies for Achieving Financial Security. Invest Smart. Haruna, A. (2012). Title of the Cybersecurity Article. Journal of Cybersecurity, 7(3), 123-145.