- A new report by cybersecurity consulting firm Serianu shows the number of Saccos spending between Sh500,000 to Sh1 million rose to 27 per cent last year.
- The report is coming on the backdrop of the Covid-19 pandemic which has seen firms tap on technology to ensure business continuity.
The number of Saccos spending up to Sh1 million on cybersecurity grew by 13 per cent in 2020, illustrating the growing danger of technological risks to micro finance institutions.
A new report by cybersecurity consulting firm Serianu shows the number of Savings and Credit Co-operatives (Saccos) spending between Sh500,000 to Sh1 million rose to 27 per cent last year from 14 per cent in 2019.
The report attributes the surge in cyberscurity spend by Saccos to increased awareness on the importance of cybersecurity, increased attacks and digitisation.
''There has been a consistent increase in Cybersecurity budget in the Sacco industry over the last three years,'' Serianu said.
The report comes on the backdrop of the Covid-19 pandemic which has seen firms tap on technology to ensure business continuity.
According to the report, customers have been demanding for digital shift for the last decade but this has recently been accelerated by the Covid-19 pandemic.
''Today they are accustomed to doing things online. In the same way, and partly due to government regulation (e.g. social distancing, handling money), people are increasingly hesitant to visit banking halls, having been pushed by prevailing circumstances to adopt a digital-first mindset,'' the report states.
The report notes increased mobile attacks on Sacco mobile transaction infrastructure and low technology vendor security levels.
Serianu chief operating Officer Joseph Mathenge said that while more Saccos had embraced digital technology to transform their operations, there was a high level of unpreparedness to implement the data protection law for their members and customers.
''Our research indicates that Saccos are increasingly investing more resources in technology and security but most are still unprepared for the Data protection law,'' said Mathenge.
Furthermore, most Saccos in Kenya are struggling to comply with the requirements of the Data Protection Act.
This in turn has seen Saccos struggle to manage the information they obtain from members and customers.
This, he said, expose them to the risk of being fined penalties of up to Sh5 million each for non-compliance.
Mathenge added that Saccos were lagging behind the security of the systems even as they ramped up investments in technology and digitisation.
“Lack of security exposes them to risks of losing at least Sh10 million per transaction”, he noted.
Even so, the number of Saccos spending the least amount of below Sh100,000 has been dropping since 2018 to 36 per cent last year. In 2019, the number of Saccos in this category was at 44 per cent and 54 per cent in 2018.
Catherine Ngahu, executive chair of the SBO Research called on Saccos to embrace radical initiatives including sharing technology infrastructure instead of each sacco investing in its own, merging to achieve larger economies of scale and implementing better member engagement programs.
These steps, she explained, have the potential to double the current national sacco membership which currently stands at about 3.5 million people to 7 million members.
“Kenyan Saccos have reached a point where they need to rethink their operating models for them to survive and grow. Despite embracing technology at a faster pace over the last two years, they must establish new ways of being attractive,” she said.
Ngahu challenged the Sacco leaders to become more innovative with their offerings, pointing out that the rise of the ‘gig economy’ speaks to a whole new world of potential Sacco members.