This archive report was first published on 1 September 2019.
September 1, 2019, marked a significant milestone in Africa's digital finance journey. The continent is witnessing a surge in digital payment innovation and online commerce, bringing economic growth and inclusion to millions of consumers and businesses.
However, despite the numerous benefits, digital finance also poses significant risks. The South African Banking Risk Information Centre (SABRIC) reported a 75 percent increase in digital banking crime incidents between 2017 and 2018, with 23,466 cases recorded.
The existing system is vulnerable to phishing, vishing, and SIM swap fraud, making it essential for consumers and merchants to have trust in the digital environment. This trust is built on the assurance that personal information is properly secured, and transactions are conducted within a trusted environment.
Financial services providers, mobile application developers, and fintech specialists have a responsibility to ensure safety, security, and trust in digital finance. This can be achieved by consolidating innovative mobile and digital payment solutions into secure and trusted platforms.
Tokenizing every transaction and creating a next-generation card-based checkout experience for consumers is also crucial. This can be achieved through industry standards across all payment scenarios, such as the EMVCo standard for security and interoperability in e-commerce.
Moreover, digital identity is a critical component of the digital finance ecosystem. It enables individuals to access the increasingly digitized global economy without memorizing complicated passwords or exposing identifying data. Governments and regulatory bodies are working towards defining standards for digital identity, and technologies like biometrics, Artificial Intelligence, and blockchain are emerging as enablers.
Ultimately, the success of digital finance in Africa depends on the ability of players to manage data practices and innovation with individuals at the centre of consideration. This requires specialized knowledge, transparency, and advanced security practices that address data ownership, accuracy, and storage.
The writer is head of market development for Sub-Saharan Africa at Mastercard.
