With the financial technology sector experiencing rapid expansion, Bank of Uganda is gearing up to unveil enhanced safeguards for online and mobile transactions, addressing the rising demand for secure digital financial services.
The shift towards digital innovation has propelled exponential growth in the financial sector, as evidenced by a remarkable increase in bank accounts over the last seven years, soaring from under seven million to an impressive 23 million, as reported by the Uganda Bankers Association (UBA)
Sarah Arapta, the Chairperson of UBA, highlighted that the rapid surge was a result of collaborative efforts between banking institutions and fintechs. However, this advancement brought forth fresh challenges in the realm of cyber security, which continue to evolve.
Mackay Aomu, the Director of the National Payments System Department at the Bank of Uganda, announced the upcoming implementation of physical identification requirements for individuals withdrawing a minimum sum over the counter.
During the recently concluded two-day Annual Bankers Conference, Aomu further disclosed that they rigorously screen new industry personnel, blacklisting those found in violation. This scrutiny will soon encompass all payment service providers.
He elaborated that bank agents are being equipped with updated guidelines based on the Data Protection Act, aiming to combat financial fraud. This initiative ensures that an agent engaged in criminal activities under one mobile money company cannot operate within another network.
Agents will be obliged to sign agreements, making them liable for data protection failures that lead to loss or fraud, resulting in their blacklisting.
Telecom companies and the Uganda Communications Commission (UCC) have launched awareness campaigns across various media platforms, such as “tonfera” and “beera steady,” to educate the public about recognizing attempted fraud.
Fraudulent activities include SIM card swapping, utilizing newly registered lines for fraudulent purposes, and tricking account holders into divulging security details.
Aumo noted that system vulnerabilities occasionally arise due to hasty implementation of innovations without adequate security measures.
The conference aimed to assess Fintech’s contribution to sector growth and address emerging security-related concerns.
Richard Yego, MTN Mobile Money Managing Director, emphasized the necessity of collaboration among fintechs, financial institutions, telecom companies, and regulators. This collaboration is crucial for the secure and efficient advancement of fintech’s role in national development.
Deputy Governor Michael Atingi-Ego’s call for industry adaptation to changing public needs received a response from Yego, who stated that the focus should be on delivering banking services rather than traditional brick-and-mortar banks. Yego stressed that collaboration would ensure effective and secure delivery of solutions that resonate with the public.
Herbert Olowo, Head of Operations and IT at Absa Uganda, highlighted the importance of partnership to drive innovation. Collaboration fosters public trust and confidence in the formal financial sector. Traditional banks, he mentioned, are more trusted than technology-based services, making a partnership essential for establishing public confidence.
Despite the new security challenges, digitization of money movement has enhanced safety compared to physical cash transactions, according to Yego.
Furthermore, this concept laid the groundwork for the Parish Development Model (PDM), eliminating intermediaries and risks, ensuring direct fund distribution within the community.
Josephine Olok, Chairperson of Fitspa (Financial Technology Service Providers Association), emphasized fintechs’ complementary role in promoting financial deepening and inclusion. She stressed the need for regulators to enhance their oversight to optimize this role.
BOU’s approach signals its resolute determination to uphold the integrity and resilience of the fintech sector amidst a dynamic and ever-shifting threat landscape.
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