CBN directs digital banks, lending apps and more to protect customers from fraud – The Whistler Newspaper
Digital Financial Service (DFS) providers in Nigeria will come under strict control by the Central Bank as they are now required to provide their customers with all necessary information to protect them from fraud while using their services .
This was disclosed in the Outreach Guidelines to Address Gaps in Consumer Knowledge and Practices with Digital Financial Services issued by the CBN.
Digital financial services include services provided through digital channels, including e-money, mobile financial services,
online financial services, ATMs and branchless banking, whether through banking or non-banking institutions.
Nigeria is witnessing a surge in digital banking mostly dominated by fintechs and traditional banks.
Recently, the two largest mobile network service providers in the country, MTN Nigeria and Airtel, received licenses from the apex bank to launch mobile money operations.
The central bank hopes to achieve the financial inclusion target of 95% by 2024, a key driver for the growth of digital banking that covers the unbanked population.
But digital financial literacy is a gap CBN faces in Africa’s largest economy.
Many Nigerians using digital services and traditional banking services have fallen prey to online scammers who inflict losses of over N127 billion a year, according to Palo Alto Networks.
CBN said the new guideline would apply to deposit banks and merchant banks; other financial institutions; Payment Service Banks and Other Payment Service Institutions.
The CBN said DFS providers must “provide information that will allow consumers to differentiate DFS products from conventional banking products and services. Ensure easy access to information on all product offerings to enable consumers to make informed decisions.
“Disclose all terms, conditions, fees and other charges associated with product offerings prior to listing. Conduct evidence-based awareness campaigns to educate consumers on how to protect their assets and sensitive details.
“Ensure confidentiality of data collection and sharing when registering for the product. 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 guidance to customers and monitor fraud reports.