How tokenisation is boosting security in Nigeria’s financial industry – experts

The era of cash-based transactions is gradually becoming a thing of the past, as more cashless forms of payment continue to be developed and adopted in the Nigerian financial industry.

The use of various cashless forms of payment, such as Point-of-Sale (POS) terminals, instant bank transfers and mobile transfers, and others, has already recorded significant growth in the country.

However, cyber threats have continued to militate against the growth of the digital banking sector. The problem is also hampering the actualization of a deeper financial penetration rate in the country. But the good news is that the same problem has prompted the need to scale up innovations in the sector. One of such innovations is tokenisation.

Some of the companies at the forefront of these innovations are Interswitch and Mastercard. Recently, Interswitch collaborated with Providus Bank, Mastercard and Thales to launch a contactless Tap-to-Pay transaction via smart devices. The service allows cardholders to make fast, secure, and convenient in-store payments by tapping their NFC-enabled smart device at any contactless-enabled payment terminal.

At a recent panel session on the importance of tokenization in the Nigerian financial industry hosted by Interswitch, Providus Bank and the other partners, Jonah Adams, the MD of Digital Infrastructure and Managed Services (Interswitch Systegra), highlighted the strategic importance of such partnerships in building the Nigerian FinTech industry.

“Collaborations such as this one with Providus Bank, Mastercard and Thales have continued to spur growth in the industry, with key players like ourselves at the heart of innovation. Based on the capability of tokenization, customers can achieve a level of core protection that is not available anywhere in our industry. This is the first in West Africa and the first in Sub-Saharan Africa, which is a major feat that has been achieved with this partnership,” he said.

What the experts are saying

The discussion, which centred around cyber security in the Nigerian financial industry, featured Babatunde Okufi, Group Head, Business Development at Interswitch, Frank Atat, Divisional Head, E-business at Providus Bank and Peter Ehizogie, Cyber and Intelligence Solutions experts with Mastercard.

Okufi said that as online transaction volumes continue to grow, fraudsters have also been innovative in the way they attack. As a result, industry players also need to be innovative, hence the need for such tailored innovations as tokenization.

Already, the industry has been able to mitigate the issue of fraud by putting rules in place such as velocity limits and authentication parameters. Other levels of security include using platforms to track the rules in a dynamic manner many of which now leverage neural networks or artificial intelligence (machine learning) to track trends. But despite this level of security, there are still loopholes as these deal with the transactions in-flight.

However, the value that tokenization brings is that it deals with fraud in card transactions at a more fundamental level, even before the transaction is in flight. According to Okufi, “I like to describe tokenization as a tool that helps us future-proof card payments with a lot of convenience to customers.”

Frank Atat noted that it became imperative to introduce tokenization to strengthen security for card transactions, given the growing concerns around cyber threats in the country.

“Due to the ongoing threats, industry players have also keyed into the various cyber tools available, and tokenization will play a significant role with the additional confidence it gives customers in their use of card transactions,” Frank said.

Speaking on the threats, Frank also alluded that the need to grow the Nigerian financial ecosystem has inevitably posed a downside risk to the system. But industry players have been working to ensure that the security of every transaction is guaranteed at all times.

While speaking on how Mastercard has been able to ensure transaction safety for its customers, Peter Ehizogie noted that the company approaches the issue of security as a positive risk.

He highlighted that the company’s wealth of technologies has also helped in proactively predicting and in most cases, preventing the threat actors from coming up. “The process starts from identification of patterns in the login before the transaction, through to the transaction itself concerning volume and value, using artificial intelligence, and then reducing the amount of friction that comes into those transactions via various digital security tools”.

He also stressed the need for industry collaboration in the detection of fraud, beyond using AI for prevention, but extending to tracing these transactions and reducing the recovery time.