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The way digital technologies have impacted the business is unprecedented and phenomenal. The use of digital technologies especially in financial services has transmuted the business landscape. The conventional brick and mortar concept of the financial transaction is being rapidly replaced by digital transaction financial services and now digital banking is a usual norm.
Millions of transactions are performed every second, using hundreds of millions of internet-connected smart devices. The exponential growth of digital devices plays a pivotal role in increasing the financial development of developing countries by easing the financial transaction processes and lowering transaction costs.
Nevertheless, the digitalization of financial transactions has also increased the risk of cyber-attacks, and financial frauds as the digital devices, used for executing digital transactions, are more prone to the cyber-attacks.
These devices are also potentially susceptible to click frauds, botnets, data theft, and even ransomware. Especially, cybersecurity appears as one of the critical challenges for the financial world to prevent Phishing, Ransomware, DDoS attacks. We have many examples where loopholes in cybersecurity resulted in disasters.
For example, in May 2017, wanna crypt ransomware attacks affected around two hundred thousand computers of various sectors like telecommunications, hospitals, railways, automobile, and utility sectors in countries like the UK, Spain, China, Italy, Vietnam, Taiwan, and others. In June 2017 Petya, ransomware affected the computers of 64 countries. Such cybercrimes are not only a threat to the stability of the digital financial system, but these can also severely hamper financial inclusion.
The importance of cybersecurity in the context of Pakistan cannot be undermined as the country is heavily trying to increase financial inclusion. Here, it is worth mentioning one of my research study recently conducted with my PhD student to scientifically examine to what extant cybercrimes can influence the process of financial inclusion.
To our surprise, we could find a staggering impact of cybersecurity on financial inclusion. Whereas we could not find the due efforts at the government end to build the cybersecurity infrastructure and regulations. We also found that the deficiency of cybersecurity policy, poor implementation of cybersecurity strategies, weak information infrastructure, unclear identification, and ICT classification also motivate criminals to attempt cyber-attacks.
Besides, poor cybersecurity awareness, poor cybersecurity responsiveness, lack of providing funds for cybersecurity systems, cybersecurity skills, the audit of cybersecurity capacity, and legislative penalties for cyber-attacks are the loopholes through which criminals can damage the systems.
The financial sector works with global authorities and monitoring agencies to develop a model to help to monitor and address such threats to combat such cybercrimes. The key concern here is that there is no active compilation service in the banking sector to identify the cybercrime trends and compile a model accordingly.
Putting, together, cybersecurity is a vital element for effectively accelerating the financial inclusion strategy and it requires serious attention of the government and other stakeholders to build the proper cybersecurity infrastructure and cyber laws. Without concerted efforts on improving cybersecurity, the dream of financial inclusion may never be achieved.
