A report released by Africa Financial Industry Barometer has revealed that a staggering 97% of top financial executives in Africa view cybercrime and regulatory constraints on cybersecurity as a major threat to the financial industry. alongside worsening economic conditions.
The report, which was developed in partnership with the Africa Financial Industry Summit and global consulting firm Deloitte, provides key insights into the current state of the financial industry in Africa.
The survey, which included executives from some of the leading financial institutions in Africa, found that cybercrime was a significant concern across the board. However, it has been revealed that financial institutions in Africa are facing a multitude of challenges; Macroeconomic conditions, political and social instability, as well as security risks, were also found to be prevalent challenges.
According to the report, political or social instability and security risks are the second most significant threats faced by financial institutions in Africa. This is particularly concerning, as it may indicate a growing unease regarding the recent spate of military coups, with five occurring in 2022 alone and six in 2021. Additionally, internecine conflict in some regions is also exacerbating these concerns.
Every year, cybersecurity incidents are costing African financial institutions between $3.5 billion and $4 billion. The report attributes the heightened concern to the increasing volume and complexity of cyberattacks.
As cybercriminals continue to evolve their tactics, financial institutions are struggling to keep up with the pace of technological change and protect their systems from unauthorized access, data breaches, and other malicious activities.
The report also showed that, there is a growing trend towards data sharing in African financial institutions. The report highlights that approximately 50% of financial institutions are now willing to share incident risk data, 42% are willing to share fraud data, and 50% are willing to share data to facilitate interoperability of digital payments. However, on average, only 24% of financial institutions surveyed reported actually sharing data related to risk incidents, fraud, money laundering, or cyber incidents.
It was also found that only 15% of financial industry leaders believe that cybersecurity regulations in Africa are effective. A significant 74% of those surveyed believe that there is a need for improvement in this area. The remaining 11% of respondents either do not know about the existing regulations or believe that there are no regulations in place for cyber and information security.
The report also found that 36% of financial institutions are planning to establish partnerships that will enable them to share data in the short to medium term. This suggests that while there is still work to be done to encourage more data sharing among African financial institutions, there is a growing awareness of the benefits that can be gained from such collaboration.
The findings underscore the urgent need for financial institutions in Africa to invest in cybersecurity measures to protect themselves against potential losses. Failure to do so could leave them vulnerable to costly attacks that could undermine their reputation, erode customer trust, and threaten their long-term viability.
Overall, the 2023 Africa Financial Industry Barometer serves as a wake-up call to the financial industry in Africa, highlighting the urgent need for greater investment in cybersecurity measures and increased awareness of the risks posed by cybercrime. As the industry continues to grow and evolve in the coming years, it is clear that cybercrime will remain a top priority for financial executives across the continent.
The survey, which was carried out in September 2022, offers insights into the challenges and opportunities associated with the transformation of the financial industry. The survey consisted of thirty questions posed to leaders of financial institutions and serves as a barometer for the industry.
The survey was conducted amidst the sudden bankruptcy of two regional American banks and the setbacks faced by Crédit Suisse, which was acquired by UBS. Although the African banking industry is analyzing the impacts of this crisis, the valuable lessons learned from the current survey are not expected to be fundamentally affected.
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