Deal seeks to strengthen mobile money security

Dar es Salaam. A global RegTech firm (which deals with the management of regulatory processes within the financial industry through technology) has implemented its mobile money compliance platform in Tanzania in deliberate efforts to further strengthen the security of the country’s mobile money transactions. Global Voice Group (GVG) has implemented its M3 platform for the Tanzania Communications Regulatory Authority (TCRA).

Tanzania is Africa’s second largest mobile money market after Kenya.

M3 is the first mobile money compliance platform on the continent. GVG’s M3 solution consists of a data acquisition and processing system for the monitoring of all mobile money transactions in any country, according to the GVG chief executive officer, Mr James Claude.

TCRA’s M3 system captures all the transactions data from each mobile money application for the purposes of monitoring, verification and analysis. It also allows the regulator to monitor evolution of the mobile money market, and the level of compliance with Tanzania’s laws and regulations.

Tanzania’s mobile money penetration reached 53 per cent, with 29.7 million mobile money subscriptions, in 2020, compared to 21 million in 2018: an increase of 41 percent.

In June 2020, mobile money transactions worth a total of Sh10.6 trillion (about $4.6 billion) were conducted. That was an increase from the Sh9.46 trillion that was transacted in May 2020 - and Sh8.3 trillion transacted in April 2020.

The numbers are staggering - and, therefore, the regulatory impact on the economy very is highly significant.

“For over seven years, GVG has supported TCRA and the central bank (BoT) in their oversight of $247 billion in mobile money transactions, bringing them into the compliance circle through the M3,” said Mr Claude.

The move seeks to provide the crucial role of oversight through automated monitoring, data analytics, the identification of suspicious transactions and background checks using international criminal and financial databases.

So far, GVG has facilitated the verification of mobile money transactions valued at $360 billion across the globe.

According to the GSMA State of the Industry Report on Mobile Money 2019, there were a total of 469 million mobile money users in Africa in 2019, making the continent the world’s most dynamic region in terms of mobile money transactions.

In 2019, the sub-Saharan region recorded 23.8 billion mobile transactions, amounting to over $456 billion, and the Covid-19 health crisis has had a catalytic effect on the expansion of the mobile money market.

Looking forward, the mobile money market is expected to reach a transaction value of $216.4 billion by 2024, growing at a Compound annual growth rate (CAGR) of 28.7 per cent during 2019-2024.

While this digital transformation means greater financial inclusion for the unbanked population, the rapid expansion of the sub-sector necessitates better regulation. Indeed, the risks associated with these applications are multiple, including illicit financial flows, identity theft, money laundering, terrorism financing, and noncompliance with national standards. Cybercrime is now viewed as one of the top 10 global risks.

According to the ITU Global Cybersecurity Index 2018, Africa has the lowest number of countries with a cybersecurity strategy - with only a third of them using metrics to measure cybersecurity. This lack of digital protection affects governments, businesses and citizens, which poses a threat to the stability and growth of the continent.

Indeed, cybercrime comes at a cost: about $3.7 billion per year, according to a study carried out by the cybersecurity company Jighi in 2018. This threat could hinder the rise of the African digital economy.

Recently, hackers used around 2000 mobile SIM cards to gain access to the mobile money payment system in Uganda. It is reported that at least $3.2 million was stolen in this incident.

“Faced with this growing insecurity, Africa must invest considerably in cybersecurity in order to calmly tackle the fourth industrial revolution. This is an unavoidable issue for the 460 million mobile phone users on the continent,” said Mr Claude.

He further adds that, “GVG’s SafetyNet Suite effectively addresses governments’ and regulatory bodies’ digital challenges using cutting-edge tools, in compliance with privacy laws”.

This has led the company to be recognised as one of the top 30 RegTech companies, in auditing firm Deloitte’s RegTech Directory.

There is still a clear need to effectively support law enforcement, policy compliance and security throughout national internet & mobile ecosystems and effective oversight of digital and mobile identities.

Given the impact of mobile money, the anticipated growth of the sector, and consequential heightened reliance on technology, it is clear that the role of RegTech companies will become increasingly important going forward as governments look to tackle the increased need for transparency and regulation of the telecommunication industry, as well as the range of cybersecurity threats that will emerge.

Technology is always evolving and governments continue pushing for fast adoption of solutions for a digital nation, to remain competitive as a country.

Data-driven decision-making is key to ensuring that the benefits of digitisation are not diluted.

Technological innovation and infrastructure should, therefore, also continue to strive and remain ahead of the dynamism of the industry in order to protect both citizens and governments from the plethora of risks brought by the Fourth Industrial Revolution.