Simon Aderinlola had seen the dark side of data privacy. As a veteran in Nigeria’s banking scene, he’d witnessed firsthand the reach for digital transformation go awry. In 2022, a growing concern led him to a fintech-focused WhatsApp group. There, he sparked a critical conversation about the industry’s vulnerabilities.
The conversation grew as CEOs, compliance officers, and tech experts rallied behind was initially called Project Radar—a grassroots collaboration aimed at developing an encompassing fraud-prevention platform.
An upswing in fraud has African businesses skating on razor’s edge, financial losses mounting like a surly rogue cell tower. As the region’s digital landscape expands, so does the sophistication of bad actors, bringing hefty repercussions for firms attempting to weather what’s become a relatively treacherous storm.
In Nigeria, the situation is particularly dire. Fintechs reported combined losses exceeding $6 million within the first eight months of 2023. Data from the Financial Institutions Training Centre highlights the scale of the crisis, as businesses struggle to combat the rising tide of cyberattacks.
Flutterwave, the fintech that is Africa’s highest-valued startup, disclosed losing $24 million to a recent breach, following a rather tumultuous year where it reportedly lost $14 million to security incidents. In parallel, MTN Nigeria lost over $15.3 million in 2022 to unauthorised transfers from its mobile money service. The crisis has intensified calls for more stringency.
As concerns mount, demand for robust, perhaps innovative solutions grows alongside.
Two years later, Project Radar has metamorphosed into Reporta, a cross-industry registry specialising in fraud detection and prevention, as an important complementary component of the architecture combating the unrelenting menace.
Launched in September 2024, the platform is now in talks with over 100 companies, including commercial banks, MMOs, fintechs, microfinance banks, and insurance firms.
In collaboration with regulators, government agencies, and parastatals, it intends to ensure compliance with evolving standards. The platform is open to work with crypto firms, aligning with the SEC’s recent licensing framework, enabling them to join as licensed entities or through sponsors.
It claims about 40 firms have engaged and are at various stages of signup and onboarding, and wants to expand across several industry verticals — banks, MMOs, fintechs, pensions, insurance, securities, and e-commerce.
Grinding to a start
Project Radar began with a group of people driven by the recognition that, even in a competitive industry like banking and fintech, collaboration remains a no-brainer.
“Using the analogy of a racetrack for car racing, the racetrack must be in good condition for competitors to race fairly. If the track has potholes or obstacles, it hinders competition. In the same way, for fintechs to compete effectively, the industry infrastructure — the “racetrack” — must be solid,” Aderinlola, Reporta’s Program Director quips.
He says, recognising the common challenges faced by fintechs, despite intense competition, “the project’s founders sought to create a collaborative solution. Initially, the goal was to foster awareness and encourage broader industry participation in enhancing this critical infrastructure.”
At a point, it became clear the problem required a more serious entity to manage it. A handful of fintech CEOs developing a quick fix didn’t quite do the trick. The solution had to be scalable, properly governed, and compliant with data privacy laws.
As the discussion progressed, it was apparent that a dedicated team, with the right funding, governance, and expertise in areas like data privacy, was needed.
Project Radar laid the groundwork, but as the vision widened, the need for something more substantial became obvious. It wasn’t enough to be a fintech solution tied to a firm or group — it needed to be independent, scalable, and industry-wide. This led to the transition to Reporta, ensuring that it is perceived as a solution for the industry, not just for one company.
Building Reporta
“From the outset, our research informed our building Reporta with compliance and data privacy in mind,” says Aderinlola. “Certain data fields submitted by users are encrypted with no one — director, board, product manager, or the developers — being able to access the sensitive data. Only the entity who uploaded can view and edit”.
To ensure further compliance, the team sought legal guidance early on. “We consulted with lawyers and reporters who helped us accurately describe its role and limits. They warned us not to loosely use terms like “fraud,” which can have legal implications in the local context.”
According to Nigerian law, an individual cannot be labelled “fraudulent” until they have gone through a full legal process and been convicted. Following this guidance, Reporta avoids using such terms and instead focuses on identifying “suspicious transactions.”
For example, when Aderinlola was head of digital at a bank, he noticed a pattern with a customer who would consistently try to exploit loopholes in the system. He would attempt significantly larger transactions — often at odd hours — compared to his available balance.
For instance, with just ₦5,000 (~$3) in his account, he would try to process transactions of ₦50,000 (~$30). When he had ₦20,000 (~$12), he would attempt ₦200,000 (~$121), and with ₦2,000 (~$1.5), he would try ₦500,000 (~$304).
“This behaviour was suspicious, and we tracked it with the help of a data scientist,” Aderinlola says. “We gave him a call, and calmly told him we had gotten interested in what he was attempting and were willing to help with any problem — he desisted. In cases like this, the platform flags and analyses abnormal activity without prematurely labelling anyone as fraudulent.”
“Not just why, but why not?”
How Reporta solved its potential trust concerns is an important tell. Drivers and early sponsors were business leaders — of banks and fintechs. But, which of these discussants could come to drive this initiative and not make it seem like a siloed, single-branded solution?
At the Oct 28, 2023 session, it was agreed that a member of the team that commenced talks from a 2022 WhatsApp group drive the initiative.
Understandably, upon volunteering to drive the team sourcing, recruitment, CAC registration, bank engagements, not-for-profit tax reporting, legalese, and pitches to over 100 fintechs and banks that showed preliminary interest, Aderinlola’s LinkedIn profile got many checks and his former colleagues and bosses got calls.
Aderinlola’s background in fintech, telecoms, digital banking, supply chain finance, and bootstrapped entrepreneurship came in handy. For him, this is similar to leading licensees in the telco VAS industry to engage the NCC till the release of a VAS license about a decade and a half ago.
The endeavour had risks and many pushbacks, but nothing great came easy. Besides, Aderinlola’s career has taken him through leadership roles — but this new beat had an air of risk. For many, it might have seemed like a step backwards, a gamble on something uncertain. But for Simon, it was simply a case of asking, “Why not?”
“I thought, ‘Let’s do this,’” he says. “I noticed a lot of hits on my LinkedIn profile at the time, so I knew people were paying attention. That gave me the sense that they felt comfortable with me taking the lead. Most of the things I’ve built have come from a place of ‘why not?’ rather than [just] ‘why,’” he tells Condia.
“I felt like this was worth building, and we’d see where it takes us. So far, the journey has been promising, but it’s been anything but easy. “It’s been quite some work,” Simon admits, “but based on the vibes we’re getting, things should turn out well.”
From finger-pointing to hand-joining
Getting banks and fintechs on the same bandwagon is no walk in the park, but Aderinlola shares some insights into its impact so far. Conversations began on October 28, 2023, during a pivotal, finger-pointing meeting in Nigeria with around 60 banks and fintechs.
It was a candid, almost confrontational meeting where they realised “we were part of the problem in terms of escalating fraud numbers”. The consensus was clear: if we didn’t act, the problem would persist.”
Following that meeting, a team was assembled and began work on December 1. It brought in engineers and dedicated resources, and from December to August, it focused on scoping, building features, testing, and pushing to production.
While Reporta expects usage to ramp up between now and December, its focus is on a few priorities: platform stability, global research to identify features from other jurisdictions like the UK and the US, and exploring how similar portals assist banks, fintechs, and the public in reporting suspicious transactions.
“We’re also working on expanding our partnerships, integrating with companies via APIs, and engaging relevant regulators to enhance collaboration,” says Aderinola. “One of the unique aspects is its openness to government agencies and regulators, inviting them to work with and provide guidance”.
“Whether it’s the NCC, CBN, or NICOM, we are reaching out to various industries, positioning Reporta as a cross-industry solution. It allows different sectors to submit and access data, helping everyone — banks, fintechs, and even the public — combat fraud head-on”.
Sometime in the recent past, a topic that became over-flogged is the disconnect between banks and fintechs, with the former blaming the latter for fraud spikes. A chunk of the blame has also gone to MMOs and firms (fintechs, banks, MMOs, etc) that manage agent networks, usually seen as the conduits for channelling out fraud proceeds.
On this issue, Simon asks for some restraint, “lest we hurriedly give a dog a bad name and hang it. The pursuit of financial inclusion, from the days we started seeing M-Pesa in our dreams made the present outcomes of growth and proliferation of POS agents a success story”.
As is true of any innovation, the guardrails can lag behind the speed at which faster ways to access money turn the bend. That is one problem being addressed. Going accusatory to situate the blame in one place is unwise. Since some fintechs are taking up bank licenses, the assumption they are the “bulls in the China shop” wanes fast.
If you say that someone rushes in like a bull in a China shop…
If you say that someone rushes in like a bull in a China shop, you are critical of them because they do not stop to think. In fintech, the phrase describes a company that aggressively disrupts the market, often without regard for existing structures, and regulations.
Reporta aims to bridge this gap, providing a platform for collaboration between banks, fintechs, and regulators to tackle fraud in a unified, secure way. The platform is not fintech-specific; its board is diverse, comprising three C-level bankers, two fintech execs, and a CTO from the insurance sector.
It engages banks and fintechs with adequate respect. Any firm deemed too small to be onboarded can work through a sponsor organization or other licensed entity. To this end, the platform is not fintech-specific, with a maiden board composed of senior C-level execs from banking, fintech, and insurance.
While fintechs piloted “Project Radar”, the need to address the elephant in the room has been felt. Some banks have taken a more complacent approach, accepting fraud as an inevitable cost and budgeting for it. However, this indirectly invites more.
The relationship between banks and fintechs can be tense. But Aderinlola believes as long as fintechs adhere to the banks’ rules of engagement, there should be no issue. “The key is clear communication and collaboration to ensure everyone is protected,” he says.
Staying on track
As Reporta continues to refine its offerings, there is a palpable optimism about the future of fraud prevention in Africa.
The growing recognition of fraud as a critical risk is prompting more companies to invest in compliance and seek innovative solutions. But challenges remain. Simply introducing more solutions will not instantly resolve the myriad issues faced. Instead, an ongoing commitment to innovation and collaboration within the financial sector will do the trick.
Central to its strategy is user education. Informed users are vital; it promotes awareness to recognise and mitigate risks. It has developed a suite of educational resources, including webinars, workshops, and informational guides, to help businesses understand aspects of fraud prevention and compliance.
As expected, Reporta envisions leveraging AI and machine learning to enhance its capabilities. Simon sees these, not as nice-to-have buzzwords, but as real tools that every institution should have to hone its strengths, especially as those perpetrating fraud use some form of these tools too.
These technologies have the potential to provide deeper insights into transaction patterns and anomalies, allowing for even more precise fraud detection. As the landscape evolves, Reporta stays leading the charge against fraud, armed with tech, education, and a vision for a secure future.
