e-Banking and cyber security

Over the past three decades after globalisation and financial sector liberalisation banking industry has grown rapidly with financial institutions providing online banking services  and encouraging customers to do online banking transactions such as money transfer, access information about the account or otherwise as well as payment of monthly bills. During all this time Internet crimes and thefts is bringing on forefront issues of cyber security all over world.

Again in Developing countries cyber security threats in banking sector are becoming more pronounced and serious due to lack of financial literacy and awareness among customers.


The Africa Cyber Security Report 2016 cites the cyber security issues in Africa as low awareness, increased insider threats, inadequate budgets and management support, increased Internet of Things threats and emerging technology and enterprise resource planning. Other issues include vulnerability and patch management, poor implementation of regulation and policies, cyber bullying and ineffective identity and access management practices.


Rwanda’s financial sector is growing and becoming competitive. Over the past few years there has been growth of Digital or electronic payments and services. With growth of e-banking system, Rwanda’s financial sector is becoming vulnerable to cyber security threats and fraud. The National Bank of Rwanda (BNR) has warned that local banking sector is prone to cyber fraud.


There has been increase in reported cases of cyber crime in Rwanda. Based on BNR official data, the country has lost Rwf 257 million to cyber attacks and other frauds in the financial sector. During the first quarter of 2015, the loss was estimated at Rwf174 million. According to the Governor of the Central Bank, there has been an average of 8,000,000 financial cyber-attacks attempts per year.

Although cybercrimes are threatening companies all over the world, the risk is higher for African businesses and banking sector. Again, Africa is relatively limited in terms of communications infrastructure. Due to the high penetration rate of new technologies, the continent increasingly a target for cybercriminals as most African countries still have a challenges related to cybersecurity.

The implications of cyber security issues are enormous. This discourages people from opting for online banking and thus affecting competitiveness of banks in Africa.  People who already have a bank account are reluctant to adopt e-banking. It is also an obstacle to drawing those who don’t have bank accounts into the formal financial system.

Kenya, Nigeria and South Africa are among African countries that have already suffered millions of dollars in losses to cyber crime. Nigerian officials estimated the country’s institutions lost $630 million annually to cyber attacks, theft and software piracy, nearly one per cent of the country’s gross domestic product while online bank fraud more than doubled. In Nigeria only 53 per cent of the population is in the banking system.

Global Cyber security measures adopted

Traditionally banks have been using paper based identity documents or government issued photo ID cards to identify and authenticate their customers. But this method of identification has been constantly forged by fraudsters as it is easy to print documents. Use of Biometrics has been becoming one of most popular tool of managing cyber threats.

With biometrics it becomes near impossible to use someone else’s identity. Banks around the world are increasingly opting biometrics to authenticate customers accessing their services.

Many countries have adopted use of fingerprint technology as a measure of cyber security. Global Market Insights data shows that fingerprint technology will be a popular technology recording tremendous growth by 2024. Other biometric technology becoming popular is iris recognition. Again according to Global Market Insights data, iris recognition technology will see double-digit growth between 2017 and 2024.

In America, many regional banks and credit unions are using app sign-on via eye recognition. Wells Fargo Bank offers an eye-scan option to corporate clients. Bank of America partnered with Samsung to begin testing the technology.

Most South African banks use multi-factor authentication (MFA), which requires some input from users in order to finally authorize transactions. The risk-based authentication systems that are currently trending are aimed exclusively at providing hassle-free transactions, and consumers are not asked to go to the bother of supplying added authorisation.


E- Banking and Digital banking are some of the instruments of enhancing financial expansion, but due to issues of cyber security expansion, digital and online banking is being restricted. One of issue is lack of enough financial resources and skilled Professionals to check on cyber threats.

Enhancing cyber security should be top priority among financial organisations to explore full potential of E- banking. EY’s Global Banking Outlook 2018 reports 89 percent of banks rank enhancing cyber and data security as a top priority.

In developing countries, Monetary Authorities should adopt multiple approaches to enhance online and e-banking adoption. They should use technical tools like biometrics approach for big corporate customers and financial literacy enhancement for individual customers and small entrepreneurs. Again Cyber security laws and punishments should be clear and strengthened to reduce frauds and cyber crimes.

Dr Jaya Shukla is a Kigali based economist and consultant.

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