Guarding Africa's digital growth with a resilient fraud prevention infrastructure

The increasing number of Africans adopting digital technologies offer businesses the opportunity to ship solutions quickly and at scale. The technology adoption witnessed is enabled by increased internet penetration and smartphone adoption.

Research from Statista indicates that the number of internet users in Africa has grown from 160 million in 2013 to over 530 million in 2022. Also, smartphone adoption has been at a record high as data shows that the number of smartphone users in Nigeria is estimated to be between 25 and 40 million.

However, as technologies offer a lot of opportunities for individuals and businesses, they have also accentuated some unique sets of challenges.

For instance, the same way we have names and identity cards in the physical world, the acceleration of digital interactions has warranted the need for a robust digital identity infrastructure.

While customers need to trust that their personal information and digital assets are safe, businesses need to know that their customers are who they claim to be in order to mitigate fraud and deliver personalised services.

According to a World Bank Group report, an estimated 1 billion people worldwide are having trouble proving who they are, and roughly 80% of them are living in sub-Saharan Africa and South Asia.

This lack of authentic customer data poses a big challenge to startups. Why? It makes the onboarding process of new customers quite daunting. Regardless of your industry as a business, there’s an increasing need to verify customers are exactly who they say they are. Asides being in line with regulations, there’s a need to be sure the individual is real, not a ghost, bot or fraudster.

In addition, after onboarding the clients, there’s also a need to observe what each individual client is doing on the platform. Sometimes, fraudulent activities are performed with valid details or when the original owner of the data loses their device or login details.

On a grander scale, the growth of digital technologies has seen a significant increase in cyberfraud risks as more people use digital channels for transactions. In June 2022, MTN sued 18 Nigerian banks after it lost ₦22.3 billion ($53.7 million) to mobile money fraud.

More recently, Flutterwave lost N2.9 billion ($6.3 million) and another N550 million ($1.2 million) per reporting from TechCabal. The tech Unicorn claimed to have only discovered unusual trends in several user accounts during a routine check of its transaction monitoring system but claimed it did not lose any funds.

As a measure to reduce fraud, Semafor reported that Flutterwave and 12 other firms which include Kuda, Branch and Cowrywise are working on a data-sharing initiative. Tagged Project Radar, the initiative would enable companies to pool details, including banking and government identity data, of individuals and groups that have attempted or made fraudulent transactions.

Data sharing, to find out the historical transactions of a user is one way to prevent cyber fraud, another method that businesses can use is observing what their clients are doing on the platforms. This is because some fraudsters pose themselves as users.

According to Nigeria Deposit Insurance Corporation, electronic (or digital banking) channels accounted for 187,870 cases or 88.74% of total fraud cases, with an actual loss of ₦‎4.97 billion representing 69.10 per cent of total industry losses for 2021.

A new fraud prevention product

Dojah, an identity verification platform, recently launched a new fraud prevention product called EasyDetect. The tool will assist digital businesses recognize and thwart dishonest practices on their platforms.

The product is a culmination of feedback clients have given to Dojah since it launched. Ayomide Oso said, “before now, we were more concerned with helping businesses onboard and verify new users.

But based on feedback, we realised that beyond onboarding genuine users, businesses wanted to be able to proactively spot and prevent suspicious activities on their platform.”

Since 2021, Dojah has been helping businesses identify, verify and digitally onboard customers. The idea for Dojah, which is the brainchild of Tobiloba Ololade and Ayomide Oso, was gotten while the duo both worked as colleagues at Elta Solutions— a dev shop that serviced software companies.

"We were building a product called Expensa—an expense and income-management product for Africans. While building, we found it difficult to get the data APIs we needed. We had to reach out to stakeholders individually to get the APIs, and it made building very slow. We quickly figured this was not a unique problem to us, and we carried out some user research to confirm our hypothesis. That was how Dojah started,” Ololade stated.

Today, the YC backed startup is enabling businesses to validate user identities through means like liveness check, selfies, biometric verification and validating identities with OTPs. With their suite of API and no-code tools, Dojah’s end-to-end onboarding platform is helping businesses onboard verified Africans to their services.

On Dojah’s positioning to solve the problem of core product fraud, Tobi Ololade spoke about their knowledge of the major issues. “When we first launched, more than 90% of our customers played in the FinTech space. Based on further interaction with these fintech businesses, we discovered that a lot of these FinTech companies faced similar problems.”

Before Dojah, Ololade and Oso had built a couple of Fintech-related products. So they saw first-hand the issues FinTechs experienced when they were not properly guarded to fight crime. “Beyond KYC, being a core product, fraud is a critical issue that is being battled,” Ololade said.

Also, a number of Dojah’s current clients are set to explore the product as it was built based on their feedback and adapted to fit their need for a real-time fraud prevention solution.

Pricing and getting onboarded on EasyDetect

The process of getting onboarded on EasyDetect is seamless. To get started, reach out to the Dojah team to establish communication. After verifying that your business is active and registered, you’ll be given access to the product.

There’s a team of engineers who will be willing to walk you through the process and help you integrate the product. But the product is built in such a way that you don't need extra hands.

The pricing model for EasyDetect according to Ayomide Oso, is subscription based. “The product is currently available for users on a subscription basis which is prepaid, while we have room to adjust the pricing to fit business needs as well.”

Looking forward

On the future of fraud prevention and ID verification, Ayomide commented that as the world becomes more digital and online transactions become more prevalent, there is a growing demand for dependable and secure solutions.

Dojah’s technology is designed to address this need by employing sophisticated AI algorithms to analyse and verify user information, including biometric data, document information, and transaction monitoring.

There’s also a need to build custom AI/ML algorithms to analyse large amounts of data to identify patterns of fraudulent behaviour. This will further help prevent fraud before it happens, rather than just detecting it after the fact.

Dojah already uses machine learning algorithms to analyse user behaviour and detect signs of fraud. The identity verification solutions provider would be improving on this as they expand on the feature.

Towards the end of the year, Dojah will also be dabbling into blockchain technology, to be able to provide a secure and tamper-proof way of storing and sharing digital identities.