Aviation Ghana

Cybersecur­ityConcern­sinDigital Finance: The Ghana Perspectiv­e

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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.

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