As the fintech industry continues to redefine the way we send, receive, and manage money, one persistent threat that looms large is FRAUD. The more digital the ecosystem becomes, the more sophisticated the tactics used by fraudsters. In an industry built on speed, convenience, and trust, combating fraud isn’t just a back-end function, it’s a frontline priority.
From identity theft and social engineering to account takeovers and payment fraud, the methods used to exploit fintech systems are constantly evolving. A new study from Juniper Research has found that the cumulative merchant losses to online payment fraud globally between 2023 and 2027 will exceed $343 billion, with developing markets especially vulnerable due to growing mobile penetration and underdeveloped regulatory oversight.
In Africa, where fintech adoption is booming, the stakes are even higher, and so rapid innovation must be matched with rigorous defense systems.
The Woven Experience
As Woven Finance grew, it faced increased risks of fraud, especially during merchant onboarding and virtual account creation. Fraudsters were reusing identities or leveraging previously flagged information, leading to regulatory exposure, repeated fraud attempts, and reputational risks.
To proactively stop known fraudulent actors, we set out to create a BVN Blacklist Database that could screen identities in real time, block suspicious virtual account creation, and enhance compliance.
A secure internal blacklist populated with flagged BVNs from internal investigations, partner banks, and regulatory sources was also implemented, and was directly integrated into onboarding APIs, enabling real-time checks. A governance process ensures proper review, updates, and oversight by the Risk and Compliance team. Blocked users receive clear notifications, and high-risk cases are escalated when necessary.
How we Combat Fintech Fraud
- Real-Time Transaction Monitoring: Advanced analytics and AI-driven systems allow fintechs to detect anomalies like unusual transaction volumes or sudden location changes in real time. Flagging and freezing suspicious activity instantly reduces loss.
- Multi-Factor Authentication (MFA): Requiring more than just passwords to access accounts like OTPs, biometrics, or security questions adds critical layers of protection, especially on mobile platforms.
- Device Fingerprinting & Behavioral Biometrics: Modern fraud detection goes beyond usernames. Tools that recognize typing patterns, IP addresses, and device IDs can flag imposters without interrupting the user experience.
- KYC & Continuous Identity Verification: Strong Know Your Customer protocols at onboarding are essential, but smart fintechs go further, verifying identity at key points throughout the user journey to catch synthetic identities and account misuse.
- Education & User Awareness: Many fraud attacks begin with social engineering. Fintechs that educate their users on phishing scams, fake links, and impersonation attacks empower them to act as the first line of defense.
- Collaboration Across the Ecosystem: Fighting fraud isn’t a solo act. Collaboration between fintechs, banks, regulators, and law enforcement is crucial to stay ahead of emerging threats and share intelligence on fraud patterns.
What This Means for Emerging Fintechs
Fraud prevention is more about protecting reputation and customer trust, and not just assets. In an ecosystem where word-of-mouth and user experience drive adoption, one breach can set a brand back years.
Platforms like ours at Woven Finance are taking proactive steps by integrating real-time fraud detection tools, verifying merchant identities, and enforcing transparency across all payment flows. It’s not just about building sleek interfaces, it’s about building trust into every transaction.
As digital payments scale, fraud risk scales with it. But with the right tools, mindset, and ecosystem collaboration, fintechs can stay one step ahead.
Because in a world of instant transactions, trust is the real currency and it must be protected at all costs.