CBN Directs Digital Banks, Loan Apps, Others To Protect Customers From Fraud

Digital Financial Service (DFS) providers in Nigeria will be under strict scrutiny of the Central Bank as they are now required to furnish their customers with all information necessary to protect them from fraud while using their services.

This was disclosed in the Awareness Guidelines to address gaps in consumer knowledge and practices with Digital financial Services released by the CBN.

Digital Financial Services include services delivered through digital channels, including electronic money, mobile financial services,
online financial services, i-teller and branchless banking, whether through bank or non-bank institutions.

Nigeria is experiencing a surge in digital banking services primarily dominated by fintechs and traditional banks.

Recently the country’s two largest mobile network service providers- MTN Nigeria and Airtel have received licenses from the apex bank to begin mobile money operations.

The central bank is hoping to meet the financial inclusion target of 95 per cent by 2024, a vital drive behind the growth of digital banking which covers the unbanked population.

But digital financial literacy is a gap the CBN faces in Africa’s biggest economy.

Many Nigerians using the digital services and traditional banking services have fallen prey to online scammers who inflict loss of over N127bn annually, according to Palo Alto Networks.

CBN said the new guideline would apply to Deposit Money banks, Merchant banks; Other Financial Institutions; Payment Service Banks, and Other Payment Service Institutions.

The CBN said DFS providers shall, “Provide information that will enable consumers to differentiate DFS products from conventional banking products and services. Ensure ease of access to information on all product offerings to enable consumers to make informed decisions.

“Disclose all terms, conditions, fees, and other associated charges on product offerings prior to enrollment. Conduct evidence -based awareness campaigns to sensitize consumers on how to protect their assets and sensitive details.

“Ensure privacy to data collection and sharing during product enrollment. Ensure an easy opt-out process for data sharing.”

Another area of concern for the apex bank is the prevention of fraud that may arise from the use of Digital Financial Services.

The CBN said service providers must provide fraud prevention tips to customers as well as monitor fraud reports.