According to a recent survey by the CBK termed the banking sector innovation survey, commercial banks have highlighted cyberattacks as a critical danger to online banking innovation as they continue to inch towards digitization.
According to the survey, cyber-risks were highlighted as one of the top three innovation-related risks by 92% of banks and 86% of microfinance banks (MFBs).
Bank cyber hazards attack data privacy and jeopardize bank customers’ data security as well as the protection of their finances.
According to the report, third-party and vendor management risks are the second most significant risk to online banking for 71% of MFBs and 67% of banks.
“This correlates with the majority of the institutions who responded to using an outsourced or collaboration and partnership approach to development of innovative products,” CBK Survey noted.
Digitization and Banks Investing in virtual security
Because of the rise in cybersecurity crime, institutions have invested in virtual security to ensure that online banking platforms are safe for users, according to CBK.
In terms of digitalization, CBK found that 92% of institutions have implemented or developed an online banking solution (mobile app or USSD) to help with banking and customer-relationship management.
Only four financial institutions (two banks and two MFBs) have yet to implement or create a mobile banking solution (app or USSD).
According to the report, the primary innovations that financial institutions consider vital are Application Programming Interfaces (APIs), Big Data and Data Analytics, Biometrics Technology, and Cloud Computing.
According to a recent survey by the Kenya Bankers Association, roughly six out of ten Kenyan banks are insolvent.
“The increase may be attributed to the challenges introduced by the pandemic and its containment measures, which have entrenched the use of contactless banking services.’’ the survey noted.