As technology takes on our daily transactions, Alvin Thomas examines how ready we are for a world where cash is a thing of the past, and why concerns over FinTech security simply won’t go away.
Imagine a world with no physical money at all: no papers, automated teller machine (ATM)s or even banks that you can walk into for a quick cash deposit or withdrawal – spooky, isn’t it?
As it turns out, the Sultanate is on the way to implementing such a virtual cash system; one in which you’d simply be required to wave your phone over a receiver to pay your bill at the market after a shopping spree, or simply top-up your digital wallet to catch a cab or book a flight ticket.
This breakthrough system is the brainchild of modernisation rising from Financial Technology (known simply as FinTech) –but it’s one that has been tainted with everything from cyber security threats to receiving the sneering label of promoting the illicit virtual black market for activities such as phishing and hacking.
And believe it or not: you’re slowly being strapped into it without your knowledge or consent.
Consent, however, is a matter that Samantha*, a personal trainer and yoga instructor, wants to discuss. Looted of nearly RO1,100 in late 2018 in a case of credit card phishing, the trainer has qualms over the complicated forms of cashless payments taking shape in Oman.
In an interview with Y, the trainer asks: “Would you trade convenience for safety, and more importantly, do you trust technology to the point that you would trust it with your money?
“I did, but not anymore,” she says, before going on to reveal how her card was used many times in the span of a few hours for online shopping in September 2018, due to which she’s still short of RO1,070.
“All I did was head out to a restaurant and a swim with my friends on a Friday. What I came back home to, however, were messages of my card’s activity to buy some gadgets.”
She says that the online fraudsters – whose location was traced back to Russia – also went on to buy a bike and several gift cards to then eliminate an easy trail for store-based purchases.
She then adds: “The bank (name withheld for legal purposes) had, however, failed to alert me about any suspicious activity due to which I lost the money. This came as a shock as they usually call me up even for my shopping activities in Muscat – like when I bought a new treadmill for my home.
“Thankfully, they’ve been quite understanding and immediately blocked the card, and upon their advice and following a formal complaint to the bank and the Royal Oman Police (ROP), they’ve also launched an investigation into it,” she adds, as she continues to wait for an update from the bank.
Unfortunately for Samantha, tracing down hackers and phishers from other countries can be difficult, says Zahra al Busaidi, an IT expert whose team specialises in designing and working with teams involved in setting the framework for mobile banking services in Oman.
She explains: “One of the greatest issues about FinTech related services such as online banking, peer-to-peer banking and even e-wallets is that when things go wrong, it’s hard to trace who is at fault.
“But the truth is that things rarely go wrong.
“I won’t jump to conclusions, but I have worked with the team in developing the app that Samantha used daily for conducting her mobile banking facilities – and it is watertight.
“So, the only ways I can see this taking place is if she has sent details to someone or if her phone was somehow infected with a malware or virus. We’re always on the lookout for loopholes in codes, and we make sure to seal off all forms of potential threats.
“But, if it is indeed a lapse from the bank’s side, it would have recognised that, and necessary steps would have been taken to get the issue sorted.
“That’s also the beauty of FinTech. When done right, the customer gets more safety and security, and more control over their funds in their hands – but this one instance is a sporadic occurrence and is something that should be solved quicker.”
However, Samantha swears to us that she keeps her bank credentials safe.
Our quest to learn more about this technology leads us to Eng. Nasser Saleh, the CEO and Founder of one of the largest FinTech companies companies in the Middle East that specialises in ePayments of bills across the region, and soon in Oman – MadfooatCom.
He begins by explaining the definition of the term to give us a sense of perspective: “FinTech itself is a technology that aims to present the public with financial services that rival and disrupt the century-old forms of stalwart financial methods (i.e. cash payments, withdrawals) with newer forms such as mobile banking and investing, easy online loan procurements and even cryptocurrencies.
It has since become a phenomenon and widely-backed FinTech startups are now surfacing to take a large piece of the market share – close to 40 per cent across the globe.
What’s more astonishing is that these companies form a network of both startups – examples of which are SMEs such as MadfooatCom and even leading transportation solutions provider Careem – and established agencies such as banks and other financial institutions.
In Oman, the regulations and licences for a FinTech company are currently the undertaking of the Central Bank of Oman (CBO).
The CBO, despite its traditional roots, says that it believes in the tech as it aims to provide easier, accessible and affordable financial services to their target customers over the coming years.
Its current scope as per the regulator spans more than six vertical business lines, namely: insurance, payments, deposit and lending, capital raising, investment management, and market provisioning.
In his keynote address to the Islamic Finance News Oman Forum, H. E. Tahir Salim Al Amri, the Executive President, Central Bank of Oman, said: “For the promotion of digital economy, CBO is taking coordinated initiatives and studying the diverse needs and potential applications of FinTech from business, regulatory and technology perspective.
“We are also ensuring that the features of existing mobile payment clearing and switching systems are further expanded to promote the use of mobile banking services and mobile wallets in Oman, even to non-banking customers,” he added.
The services offered by these don’t end with these, either.
Careem GCC’s General Manager, Khaled Nuseibeh, recently revealed in an exclusive interview with Y that it would be offering customers in Oman a peer-to-peer payment system where they can transfer money from one party to another.
With Careem’s multi-billion-dollar buyout by American transport giants Uber, however, we’re left to believe that this could effectively translate into the Uber Cash – an e-wallet with which you can pay for Uber’s services.
“Its sole intention is to make the lives of the people easier,” he adds with a smile – but as we learn, there are several concerns that need to be addressed across other aspects of FinTech not relating to his company.
And it is only upon investigating that we realise that Samantha is only a victim in one case – and that there are plenty more issues to iron out.
That said, it is up to the Oman National Computer Emergency Readiness Team (OCERT) to uphold the safety and security of online banking services.
One official from OCERT, who wishes to remain unnamed, says that the concerns regarding FinTech don’t end with credit card phishing.
He says: “From a safety and security perspective, credit card phishing is only a small portion of what we need to focus on as OCERT in the FinTech sector. There can be issues such as leakage of data from secure cloud systems, corruption that can lead to sale of customers’ personal details for rewards, and revelation of data to governments.
“But one of Oman’s greatest concerns – its government asking for personal information – can also mean that it’s working towards forming frameworks to regulate FinTech companies. And that can in turn solve the former two issues.
“So, no private body can simply come forward and set up a company without registering themselves with the CBO. And that’s why we can safely say that the risks in general in terms of one’s assets’ safety and security are lower.
Even Nasser is in support of this view: “The privacy of your credentials is vital – and our FinTech company takes great care to keep your details safe within our secure and encrypted systems.
“Though, your question of whether governments should possess your personal information would be of more importance in the West where the governing bodies have only limited knowledge of its people.
“I think we must ask ourselves in this region (Middle East), how much the governments already know about us. Any individual entering the country is already liable to provide a retina and a fingerprint scan. So, up to an extent, there’s not much else that a FinTech company can add on to it.
“Besides, with Oman coming up to provide a very centralised solution, this could be used to streamline processes further and make one’s transactions even safer too – so I see it as a win-win.”
He then implies how the real threat will be in keeping the information from leaking out to private parties and hackers.
Disadvantages aside, the Nasser reveals that FinTech has shown positive signs of growth in its almost decade-long existence – and in the process, has also ironed out several concerns from the past.
He explains: “The job market was one that was affected greatly upon the inception of FinTech in 2008.
“While a considerable number of jobs were lost when financial institutions were adopting more cashless modes of payments around the world, initially, it has turned around now, and several people are now being trained for tasks surrounding FinTech.
“Moreover, what we’ve seen with our company is that we created several indirect jobs in the market. So, we were successful in being able to create a stronger job market than what was the case in the past,” the CEO adds.
He’s not far off either, as experts from financial company ING say that not only is FinTech helping small companies in countries grow and create jobs, it’s also set to create nearly one billion jobs in Asia and Africa alone.
How these predictions will affect Oman and the rate at which Fintech will be adopted in the country remains to be seen.
A spot investigation into the public trends reveal that opinions are still split, but are leaning towards a unified system in which both FinTech and traditional cash-based systems are in use.
Sunil Sudhir, an investor and a financial expert with more than two decades of knowledge of the Oman market, is doubtful whether FinTech can make the impact that some of the entrepreneurs are claiming.
“Challenges are meant to be crossed,” Sunil says. “But the challenges are far beyond what can be achieved in the next decade or so. Currently, a mere 46 per cent of the 4.6 million people in Oman use bank accounts.
“It’s a large number to cross. For them to adopt FinTech as their primary mode of transaction, I think there must be something more value added for them than just the regular services that are offered.
“And that’s where the real test lies. They say that technology is changing the world for good – it’s a belief that is echoed by those who have reaped its rewards; be it in the field of medicine, science, agriculture, or even something we rely greatly on, like in the field of communication with smartphones.
“Yet when it comes to our hard-earned money, a bulk of people would rather keep it in their hands as physical currency or store it up in financial institutions such as banks that can then dispense it all at the push of a button.
“FinTech goes against the human conviction of giving up control over what they’ve earned. As American businessman Dave Ramsey once said: ‘You must gain control over your money, or the lack of it will forever control you.
“It’s worth a moment’s thought,” he says, as we learn that as of April 29, 2019, Samantha still hasn’t been reimbursed her missing cash.
* Name changed to protect identity