“Financial inclusion banks are progress, but security must be a priority” - fintech expert Olena Sosidka warns about fraud

Ukraine is introducing financial inclusion banks. The main mission of these financial institutions is to provide basic banking services to Ukrainians who do not have access to them. In particular, this applies to residents of frontline territories, temporarily occupied regions, rural areas, and small businesses operating in hard-to-reach conditions. New banking structures will operate without stationary branches and based on a limited banking license.

This law creates the legal framework for the emergence of a new type of financial service provider in the market. This will make it possible to solve the issue of full access of the population and small businesses to financial services in remote, sparsely populated areas, in zones close to military operations, and in liberated territories, and will also contribute to the economic development of these areas.

According to him, the main goal of the new financial institutions is to create opportunities for individuals, vulnerable groups, and small businesses to use reliable financial services where it is impossible today.

What the new model entails

Within the new model, banks will operate not in a classic format. It is envisioned that mobile agents will appear, who will come to the client's home or to partner locations: shops, pharmacies, gas stations, which will replace bank branches. This approach will expand access to banking services even in the smallest settlements.

However, despite obvious advantages, the new model has risks of fraud, especially in "on-site" operations. Elderly people or socially vulnerable groups can become targets for attackers posing as bank agents. This was emphasized by Olena Sosidko, co-founder of Concord Fintech Solutions, the first fintech ecosystem in Ukraine, and a finance expert, in an exclusive comment for UNN.

Financial inclusion banks are an important and progressive step for the Ukrainian banking system. At the same time, we should remember the possible threats of fraud that this model carries. The work of agents "on-site" and furthermore with vulnerable categories of the population creates potential risks to the security of personal data and funds. Therefore, it is especially important for the regulator to ensure client identification protocols, set up a modern cybersecurity system, and also adequately inform Ukrainians about the new system. Without this, even the best intentions can turn into problems

Meanwhile, the National Bank noted that it will control the new institutions with the same diligence as regular banks. Therefore, a bank applying for a financial inclusion bank license must submit not only the standard package of documents but also a three-year business plan and a financial inclusion strategy that describes the target regions, clients, and service channels.

Let's add

The adoption of bill No. 13018-d by the Verkhovna Rada is not only a step towards the formal implementation of obligations to the IMF but also a response to the real challenges faced daily by tens of thousands of Ukrainians – the lack of access to financial services in their communities.

Ukraine's banking system is expanding and changing in accordance with the needs of Ukrainians. And it is very important that these changes are safe for every citizen.