Swiss fintech company NetGuardians is casting its net wider in Kenya with a view to tap into increasing banking fraud cases, a decision that could boost confidence among customers.
Kenya has recently seen such devastating effects of fraud, notably in the cases of two major banks placed under receivership by the Central Bank of Kenya (CBK): Dubai Bank, which was closed in August, and Imperial Bank, closed in October 2015. Dubai Bank was found to have violated rules concerning liquidity-capital ratios, and Imperial Bank was closed for unsafe banking practices including irregular loans. CBK since announced stricter supervision and are looking for enhanced early warning systems to detect improprieties and protect bank clients.
Worldwide, fraud is a major concern for financial institutions with a 2014 report by the Association of Certified Fraud Examiners estimating that banking fraud costs $67 billion globally.
For commercial banks operating in Kenya, protecting themselves and their customers from fraud is be a prime objective. NetGuardians is already gaining notice for its software solution that provides critical controls against fraud, assisting in compliance with national and international regulations.
In the past few years, NetGuardians has already earned a strong reputation throughout East Africa, including Kenya, and these recent fraud revelations have underlined the value of their service.
NetGuardians’ FraudGuardian solution is based on NG|ScreenerZ, a smart behavioral analysis software based on policy rules and predictive analysis. With Big Data to correlate human behavior and financial transactions across entire banking system, it can identify potential fraud before it happens. It tracks and audits all activities continuously, in real time, and instantly alerts risk managers to any deviations.
“The Imperial Bank case provides an excellent example of how FraudGuardian can protect banks,”
explains John Kiptum, NetGuardians IT Risk & Internal Control Consultant, who is based in Nairobi.
Imperial Bank was found to have fraudulent activities of substantial magnitude, relating largely to irregular granting of loans in violation of the statutory limits to a single borrower. As per Central Bank regulations, banks are supposed to send data regarding their asset portfolio, but Imperial Bank directors had colluded to misrepresent their financial health.
“FraudGuardian would have been able to expose the fraud and cover-up through its continuous monitoring. It proactively highlights and reports internal and external fraudulent activity and integrity breaches. FraudGuardian would also have been able to automatically provide necessary audit trail and forensics needed to unravel the mess and help prevent future incidents,” he explained
NetGuardians’ fraud management system covers all channels (e-banking, mobile banking, front-office, back-office), IT systems, and financial transactions across the bank.
The company hopes to partner with the Central Bank to make fraudulent activities minimal.
“We are working very closely with the Nigerian Inter-Banks Settlement System and the Commercial Banks at individual bank levels to ensure that the anti-fraud initiative in Nigeria is a success. This would also be a great initiative that Central Bank of Kenya could adopt. We are determined to partner with CBK to support them in the fight against banking fraud in Kenya”,
states John Busunkwi, NetGuardians Regional Director in East Africa.
Named a Gartner Cool Vendor in 2015, NetGuardians is a leading banking software company recognized for its approach to fraud and risk assurance solutions. Their software leverages Big Data to correlate and analyze behaviors across the entire bank system – not just at the transaction level.
With pre-defined controls, NetGuardians enables banks to target specific anti-fraud or regulatory requirements. A controls update service ensures financial institutions benefit from ongoing protection in the face of the continually evolving global risk challenges.