Banks and employees are being investigated for client money fraud.
Rising fraud in banking and mobile money services risks undermining customer trust, the Central Bank of Kenya (CBK) has warned, focusing attention on banks and their employees.
The CBK stated in a banking sector stability report released yesterday that money lost through cybercrime and phone fraud will remain high in 2021.
"The rapid adoption of mobile money has been labeled as disruptive in the provision of financial services." It has, however, introduced new risks and raised consumer protection concerns, with implications for financial stability risks," the report stated.
According to the report, customers who reported losing money due to cybercrime accounted for 6.1% of mobile bank users, 25.9% of mobile money users, and 6.8% of bank account users.
Money lost due to fraud was reported by 7.5% and 53.33% of mobile bank users, respectively, who attributed the loss to internal (provider) fraud and phone-related fraud.
In contrast, 34.5 percent and 25.9 percent of bank account holders, respectively, blamed the loss on internal fraud and phone-related fraud, with "implications on consumer confidence and overall financial stability," according to CBK.
As a result of the rapid adoption of digital financial services, cyberattack threats have increased, according to reports by the National Kenya Computer Incident Response Team Coordination Centre, which is tasked with coordinating response and managing cybersecurity incidents.
As of June 30, 2021, the center had detected 158.4 million cyber threats, up from 110.9 million in 2020. This surge was driven by increased Internet penetration, the adoption of e-commerce and cloud-based services to support remote working, and increased social media use.
According to CBK data, new client uptake of mobile money accounts slowed near the end of 2021.
Mobile money providers had 27.1 million active customers in December, up from 25.7 million in 2020, representing a 5.3% annual increase in new customers.
In total, 1.9 million new mobile money customers were registered in the 12 months ending December 2021, a decrease from 3.6 million new customers registered in the 12 months ending January 2020.