Biometrics needed to protect Africa’s digital economy ambitions from growing fraud

The spiralling trend of identity-related fraud in Africa, perpetrated mostly through national ID documents, portends great dangers for Africa’s lofty plans of leveraging its digital economy to meet crucial socio-economic development goals.

This warning is contained in a 64-page report released this week by Smile ID, a digital ID verification services firm headquartered in Lagos. Attacks against organizations deploying biometrics, however, are far less likely to succeed.

Dubbed the Smile ID “2024 Digital ID Fraud in Africa Report,” the analysis, which is composed from anonymized transaction data, finds that 80 percent of identity fraud attacks are carried out with the use of national identity documents, making them the most targeted ID type.

This is because, as the report notes, “government-issued ID documents remain the cornerstone for ID verification in today’s digital world,” and “fraudsters seeking to access financial services will usually attempt to bypass onboarding protocols using compromised documents.”

Smile ID says the report is the first of its kind in Africa.

Increased investment in digital infrastructure and improved connectivity has led to a jump in the number of internet users, which means it has become easier to have access to digital services, according to the publication. And this digital transformation boom has given rise to many opportunities as well as risks either with digital onboarding or other online transactions.

The report shows that fraud trends are evolving to include biometrics because 13 percent of all biometric verification attempts it handled in the Q4 2023 were marked as fraudulent. The overall fraud rate has remained on a steady increase in the past four years, with the payments industry suffering the highest level of fraud in 2023, at more than 40 percent of verification attempts.

These high levels of fraud notwithstanding, and with the fraudsters mutating their tactics in order to beat security systems, the report highlights that biometrics remain the most reliable option to combat digital fraud.

Per the report, entities that rely on textual verification instead of biometrics are four times more likely to fall to the schemes of fraudsters. Going further, the report mentions that deployment of multifactor biometric authentication across the entire customer life-cycle is important. It also recommends the use of active liveness detection systems, which it says were responsible for identifying 87 percent of all biometric fraud attempts caught in the last year.

Smile ID reaches 100 million ID verification milestone

Meanwhile, in the report, Smile ID announced that it has reached the 100 million digital ID verification achievement, while reducing the level of fraudulent signups by about 90 percent in the process.

With this milestone, the company believes it “has firmly established itself as the continent’s leader in identity verification.”

“By combining world-class technology with Pan-African local presence, we play a crucial role in the fight against identity fraud. Not only does identity verification help businesses meet legal requirements, it is also a key defence mechanism, as customers who undergo the process are statistically less likely to engage in fraudulent activities.”

The Smile ID fraud report, which is recommended for business leaders and entrepreneurs, product owners, cybersecurity professionals and the general public, takes a dive into identity fraud trends and tactics, and the solutions that are needed to effectively tackle them.

Since 2022, Smile ID has also published a biannual report on the state of KYC in Africa, which also gauges financial fraud levels.

Article Topics

Africa  |  digital economy  |  financial services  |  fraud prevention  |  identity verification  |  Smile Identity