BoT : Digital innovation eases fraud in banking

13Aug 2019
The Guardian Reporter
The Guardian
BoT : Digital innovation eases fraud in banking

ALTHOUGH recent advancements in digital technology have made banking more efficient, digital innovations have also made it easier for criminals to defraud unsuspecting customers, stakeholders have cautioned.

Benard Kibesse, Deputy Governor at  the Bank of Tanzania.

Participants in the week-long East African Banking School, a regional conference organized jointly by institutes of bankers in Kenya, Tanzania and Uganda have been cautioned that new technology in the financial sector has brought along new problems, including digital criminal syndicates.

Benard Kibesse, Deputy Governor at  the Bank of Tanzania, said that various new innovations are being introduced in financial services everyday with the promise of more convenient services for the customer and a more modern and efficient workplace for bank employees.

Kibesse pointed out that the same people behind such innovations sometimes collude with racketeers targeting the financial sector, with the theme of this year’s EA Banking School  being ‘the role of ethics in the digital age of financial services.’

The top BoT official said that innovations have brought about a number of concerns among various stakeholders, as pertaining regulations don’t exist for some potential infringements.

Rising cases of tech-related fraud in recent years are seen in other sectors as well, but the financial segment is not only more lucrative but also cross-cuts into them all, he elaborated.

The main part of monetary transactions in Tanzania and other East African countries are nowadays being executed digitally through mobile handsets, he stated.

“Financial institutions need to adequately inform their clients about what services they were agreeing to when prompted to make choices on their preferences,” he cautioned.

It was observed during the conference that banks are currently moving their customers ‘out of their banking halls and onto their digital and agent systems,’ by extending alternative channels while downsizing their branch networks and capacity and in some cases eliminating some services from the banking hall.

For his part, Patrick Mususa, Executive Director of the Tanzania Institute of Bankers (TIOB) said the organization has 8000 members, and it makes efforts to ensure that they are all well trained and kept up to date on new developments.

“We keep reminding them that as long as IT experts in financial institutions remain faithful, it won’t be easy for outsiders to break into the system and commit crimes,” said Mususa.

But for workers in the banking sector things are far from being rosy, participants said, noting that digital developments are driving whole business and functional units to be restructured, downsized or totally scrapped.

As a result, employees are either being re-assigned or being made redundant without employers articulating company policies or set out plans for treatment of staff who are at risk of redundancy or redeployment.

Gilbert Ommbongo,  Executive Director for the Kenya Institute of Bankers said citizens of East Africa still do not trust financial institutions and unless the banks work to build trust, people will shun away from the institutions. “This is a major concern because the economy can only grow when citizens deposit their money in local banks,” he declared.

Having celebrated the diverse possibilities that recent technological disruptions have introduced in the financial services industry, this year’s Banking School focuses on the possible application of ethics in the digital age of financial services,   its emerging challenges and opportunities.

The banking school serves as a forum where bankers from the region, through presentation of researched papers by top bankers and other invited speakers, dialogue on a range of issues that impact on their careers and the financial services environment in general.

It is a forum for learning, interaction and networking with colleagues and experts from across the region and beyond, providing important personal and business contacts and a rare opportunity for valuable exchange of views in both a professional and social perspective.

The major objective of the school is to raise the level of knowledge, competence, professionalism, integrity and confidence among the participants through bringing together employees, employers, regulators, policy makers and experts in financial services to bridge the communication gap.

That will help to promote co-operation, interaction and networking, exchanging ideas and seeking solutions to similar challenges in respective economic and banking sectors in the regional context.

The EASB also aims at updating knowledge on the principles and practice of modern banking and finance, making participants aware and appreciating wider issues they have to deal with, equipping them with the knowledge and skills appropriate to cope with enhanced responsibilities.

Through school gatherings, participants get to enhance their confidence through taking part in case studies and discussion groups touching business strategy and personal development, envisioning current challenges facing banking and financial services.

“Banking schools are therefore contributing to the development of highly skilled, professional and competent bankers in the region,” organizers said.

More than 120 participants are attending the 2019 instalment of the East African Banking School at the Ngurdoto Mountain Lodge here, drawn from partner states of the East African Community and beyond, with invited delegates from India, Nigeria and new EAC member South-Sudan.