Why Financial Institutions are being hit hard by Cyber Criminals 0 309

  • Kenyan bank accounts are at risk. Kenya lost about $175million last year to cyber crime.
  • The Serianu 2016 Kenya Cyber security Report, which highlighted that about 44% of financial institutions run on a cyber security budget of $1-1,000 annually.
  • With the increased terrorist activities within Kenya, the Internet presents national enemies such as the Al-Shabaab and other extremist groups with a unique and ubiquitous opportunities.
  • There is no existing comprehensive data protection regulation in the jurisdiction of Kenya.
Why Financial Institutions are being hit hard by cybercriminals

Kenya has been widely celebrated as one of the foremost innovators around the question of financial inclusion. With the acclaim of being the leading nation in the adoption and use of mobile banking platforms such as M-PESA and Equitel, numerous fintech start-ups are opening office in the Silicon Savannah.

In Kenya, the effect of innovation by fintech companies has been brilliantly positive. Per a 2016 Finaccess Household Survey endorsed by the Central Bank of Kenya and the Kenya National Bureau of Statistics, the number of Kenyans formally included by the financial system has grown by 50% in the last ten years.

More than 75.3% of Kenyans are formally banked

Over three-quarters (75.3%) of Kenyans are now formally included, up from 66.8% in 2013. Financial exclusion, which is now down to 17.4%, has more than halved since 2006.

Cyber crime on the rise:

There is no simple way to say this. Kenyan bank accounts are at risk.

The latter statement has been evidenced by the statistics present in the recent Cyber security Report published by Serianu, which asserts that Kenya lost about $175million last year.

Moreover, the Report managed to establish that cyber criminals are deliberately targeting the Kenyan digital economy with the intention of wreaking havoc and making away with millions.

Essentially, in terms of cyber resilience, the Kenyan digital economy can be likened to a slow, plump gazelle stumbling through the “cyber-savannah” in the full view of agile, informed and hungry cyber-predators who have begun to sink their teeth into their sumptuous prize.

Cybersecurity is a budgetary concern

With more than 75.3% of Kenyan citizens formally included in financial services, one would logically expect a correspondent increase in cyber security investments in the financial services sector.

Notably, the Serianu 2016 Kenya Cyber security Report, which highlighted that about 44% of financial institutions run on a cyber security budget of $1-1,000 annually, whilst about 33% of financial institutions in Kenya have $0 spend on all matters cyber security.

44% of financial institutions run on a cyber security budget of $1-1,000 annually Click to Tweet

Effective infrastructural cybersecurity measures come at a budgetary cost which must be respected by C-Suite executives. The threat landscape is constantly evolving as hackers collectively invest in their own expertise and tools to hack siloed

Financial organisations should staff more cyber security specialists

Notably, 63% of financial organisations in Kenya have an in-house cybersecurity department. However, only 29% of the employees within in-house cybersecurity departments in financial organisations are security certificate holders.

Financial organisations such as banks and fintech companies should ensure that their customers’ data is under the watch of certified cyber security professionals who can:

  • Promptly update their security infrastructure to match threat trends,
  • Clearly communicate the organisation’s cyber security needs to Board Executives,
  • Collaborate with digital product creators to ensure that their consumers enjoy safer technology,
  • Train other employees in online hygiene as a safety net against social engineering,
  • Swiftly respond to hacking incidences to mitigate losses and collect forensic data for litigation support.

Certified security specialists are a key asset for any financial organisation, as they not only guarantee their organisations’ business continuity by perpetuating trust and reliability of financial products, but also as business enablers who can assist in ensuring that there is security by design in the creation of new financial products.

Immature Data Protection Regulation:

There is no existing comprehensive data protection regulation in the jurisdiction of Kenya. This is in vast contrast to other thriving digital economies such as South Africa, states within the European Union and Canada.

One of the impactful consequences of poor data protection is the immensely secretive way through the occurrence of breaches is treated.

Financial institutions are not necessitated by any law to proactively inform the public regarding any substantial data breaches that have occurred to the detriment of their consumers.

This contrasts with the impending General Dara Protection Regulation in Europe, the Protection of Personal Information Act of South Africa and the Digital Privacy Act (whose adoption introduced mandatory notification via an amendment in the Personal Information Protection and Electronic Documents Act) who urge that any data breach that may result in a risk to the rights and freedoms of individuals should be reported to the relevant supervisory authority.

If unaddressed such breaches can have significant detrimental effect on individuals, i.e, discrimination, damage to reputation, financial loss, loss of confidentiality or any other significant economic or social disadvantage.

Under the Constitution of Kenya 2010, Kenyans’ consumer rights as well as the right to privacy has been asserted as a fundamental right that should be protected by the full legislative might of the Government.

Innovative legislators should get to work to protect the economy of the Republic of Kenya.

Conclusion

Large banks, microfinance institutions even cutting-edge fintech firms have been taking hooks to the jaw thrown by hungry cyber criminals who can see the vulnerabilities present within Kenya’s financial ecosystem.

The reputational harm to the financial sector has been immense as confidence in new, innovative financial products continues to decline sharply.

The finance market runs on the foundational principal of user trust. If financial institutions in Kenya do not champion the cyber security agenda, share threat intelligence to develop a fresh, synergised approach to cybercriminals, those heavy blows to their infrastructure will continue to wreak havoc to their stellar brands.

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Mobile World Congress: Introducing 5G 0 286

Year after year Mobile World Congress (MWC) takes place in Barcelona, Spain. It is an event that brings together almost every vendor related to the mobile industry to show off their shiny new gadgets, apps and services in our ever-increasingly-connected world.

One of the hot topics surrounding this world at MWC 2018 was 5G — the next generation of mobile connectivity.

What is 5G and how will it affect us?

If we look back at previous incarnations of mobile networks, 1G, 2G and so on, there have been major changes to the technology. The next generation, 5G, delivers greater speed and lower latency, but also has the advantage of being able to connect many more devices concurrently. This is one of the reasons why MWC has gone from being just a show promoting smartphone manufacturers and operators to a gathering of companies showing off connected world devices that could benefit from being connected to a 5G network.

The reality is that none of the existing technologies will disappear anytime soon, in fact the speed that can be achieved on the existing network are up to 1.2Gbps. So, asking the sales representatives in a phone shop about a new 5G handset will probably have them wondering what you’re talking about.

The existing infrastructure for 4G relies on cell towers/masts, typically with reasonable distances between them, whereas 5G is based on smaller, more frequent cells. The smaller cells help deliver the additional bandwidth and lower latency as the network becomes more distributed. The speeds are reportedly able to deliver 20Gbps with just 1ms latency.

Any new networks require licenses, funding and significant effort to introduce them. In the US, AT&T claims it will be the first company with a 5G network, that will cover 12 cities by the end of 2018 and aimed at the mobile phone market. Verizon is taking a different approach and intends on implementing 5G to compete with existing home internet service providers, and with the speed and capacity available on a 5G network this could be a very competitive offering.

Many exhibition halls at MWC had devices designed for the smart city, driverless cars, smart bandages that track your healing, through to virtual reality gaming.

While faster speed is a result of the improved technologies, it is the low latency and capacity that will enable these technologies to deliver a world where just about everything could be connected. The need for capacity is compounded once the connected devices start talking to each other. For example, the future driverless car may be able to communicate with other cars, traffic monitoring, or sensors on the roads and take actions based on the environment around it.

While some 5G smartphone handsets may start to appear on shelves in 2018, we should expect the main vendors to start offering them in 2019.

The rollout of 5G is moving quicker in some regions than others, as already discussed, carriers in the US see competitive advantage and have already announced their plans. Other countries that have openly stated their commitment to early adoption of 5G are China, Japan, South Korea, Australia and Norway, and I am sure this list will grow. In Europe, commitment from both regulators and financiers for the new networks is slower. This could be seen as a competitive disadvantage, or you could view this as sensibly waiting to allow others to experience the difficulties of early adopter first.

As with any new technology there are security considerations. Providers of services will need to combat the expected evolution of advanced malware that will accompany the new 5G infrastructure and implement threat prevention services and solutions that deliver security through layers, including machine learning, to deal with the increased network performance and capacity. Threat intelligence and pro-active security measures are essential components for any device or service being developed to utilize 5G, secure by design.

It is important to remember that understanding the psychology and mindset of the cybercriminal is also important, and for this, deep research by experts in the security field will help the industry predict where the attackers may see the next opportunity. So, while 5G will move us quicker, the benefit of added speed will have a cost and means that for the time being the human component in maintaining safer technology remains crucial.

Smart, Smarter… Dumbest… 0 267

Technological evolution: who hasn’t heard of this yet? It brings happiness into our lives, more convenience and less cumbersome usage, more and more possibilities for the user… Why make life (more) difficult when it can be made so (much more) convenient?

Just look at a communication device that you cannot ignore anymore, even if you wanted to: the smart phone. For the younger generation, it’s as if a cybernetic system is prosthetically attached to their arms; resisting it is futile! And they want their phones to become smarter and smarter, taking over more and more functions of their daily lives.

Now this is, of course, heaven for manufacturers: they can all battle to find new unique money-making features to add… or to make one that already exists much better. Likewise for the developers of dedicated apps (think, for example mobile banking). Innovation to make our daily lives “easier and easier”, basically a one-click life.

With the technology evolving at an ever faster pace, and an increasing focus on being the first to have the latest selling point, thoughts of security tend to be secondary, at best. This creates more possibilities for hackers, those that want to steal information, eavesdrop, etc. As these new features are introduced more and more often, and with more and more haste, in the smarter phones, so the probability of zero-day exploits becomes higher.

It seems that with the speed of technological evolution, the “urge” of people to use new features as soon as possible – even though they may not even exist right now and while these tasks can already be done in ‘the old way’ – is unstoppable. And at the same time we complain about data leakage, data loss, lack of privacy and insecure operating systems.

Maybe it is time to press pause and make it all secure, or more secure, dial back on the technological potential technological possibilities – making devices more controllable. There is definitely a demand for that, too. Just last week the Dutch Government announced that officials must switch to dumb(er) phones, deliberately equipped with low-tech specifications, making it harder for hackers to intercept them. The new phones only can be used for calls or SMS; they lack the ability to install apps or connect to the internet (I still remember those (brick) phones from the late 90’s!). While the prime-minister and some ministers already use such a device, others will have to “abandon” their current mobile phones when travelling to specific countries or regions and will be issued with such a low-tech phone and urged to leave their regular phone at home. This should make communication secure, or at least less insecure’, since the replacement mobile phone has been prepared, checked and certified by the Dutch Secret Service. A great step back, getting rid of security by obscurity, and prioritizing safety over features.

The example of the Dutch Government is not an isolated incident, it seems to become a trend. Earlier this year, the White House banned personal cell phones from the West Wing, citing security concerns. Staff will be able to continue to carry out their business on government-issued devices.

But of course it is not only the device that needs to be more secure. You, the user of the device, have to be aware of security issues too, such as not taking a personal phone with you on business trips, but also making and receiving calls with your secure phone in a secure environment, making sure that there are no cameras or listening devices, and no windows conveniently nearby so that lip-readers can do their job. And then making sure you whisper as the walls in the hotel may be thin, and… Oh wait… Remote laser vibration sensors can decode the audio! Best to go into the hotel room bathroom, close the door (they tend to have some soundproofing), turn on the shower and stand quite close to it while calling… Am I getting paranoid?

By all means, let’s not get too James Bond-ishly paranoid. For politicians, top managers of large multinationals dealing with sensitive information that could affect stock markets, those who deal with (trade) secrets and intellectual property: this may be an issue and they should take the necessary precautions. But revert completely to using only a dumb phone, even for normal calls asking, for example, how grandmother is doing?

Just remember that in the past, listening in on calls made on the analog telephone system with no encryption was really easy. Technology brought us a long way ahead, but perhaps a bit too fast. A small step back, made by securing the current “standard”, is more feasible than complete eradication of what has been created and accepted as a normal part of our daily lives. Such a complete reversion would not even be considered acceptable anymore if we were to disallow commonly-used devices.

Are you going to tell your teenage and pre-teenage children that a hot-off-the-press-release model smartphone with the newest features is now prohibited, and an old phone that can only call/text is all that’s available? They will be angry, feel ashamed of their old-fashioned parents, and will not go out anymore as they refuse to have their friends see them with such a simplistic, dumb phone. As they will not be able to interact with their friends anymore, because social media apps do not exist for their dumb phone (and since they won’t leave the house anymore), they will have to talk to you again.

Wait a minute??? Kids that start to talk to their parents again… But that’s a good thing! Where can I get one of these phones?!