What are the security measures for loan applications in Nigeria?

Security measures are just one of the most important things you should never neglect in this internet space. Reasons for this are plenty, one of which happens to be the reasons for online theft and scamming from some hackers. Now according to the 2023 SANS Institute studies relative to cyber crime reveal that most organizations that have a robust security training program reported 75% fewer cyber incidents than those without.

This is more reason why you should think of the security measures for your loan applications in Nigeria to avoid had I known.

What are the risks associated with loan App Data breaches

In Nigeria, the convenience of digital loan platforms has unfortunately been accompanied by a surge in security threats that pose significant risks to borrowers.

Common security threats targeting unique loan applicants in Nigeria include:

Data breaches

Let’s talk about the scary reality of loan app data breaches. These apps collect a significant amount of your information, including bank account details, addresses, and contacts. But the worst part? Hackers love to break into these systems and steal your stuff! Imagine your private life splashed all over the dark web. It’s a total nightmare!

Identity theft

Imagine someone stealing your life! Identity theft is when a creep uses some of your info to get money or credit in your name. It’s more like handing over your financial keys to a stranger. Not only can it access and delete your bank account, but it can also negatively impact your credit score for years. It’s a total disaster!

Fraud

Scammers are everywhere, and they love to target people looking for loans. These sneaky crooks will tell you anything just for them to steal your money. From fake loan offers to phishing emails, they always come up with new tricks. Please never should you fall for their lies! They’ll promise you the world, but in reality, all they want is to clean out your bank account.

Do you know that the impact that these threats have on borrowers can be severe at times? As victims financial loss should be your primary concern, many might suffer monetary damages due to unauthorized transactions or fraudulent activities. Also, the consequences can also extend beyond financial implications, with reputational damage and emotional distress affecting victims. Repairing credit scores and restoring trust can be a lengthy and challenging process.

What are the security measures for loan applications in Nigeria

We will be introducing you officially to the security measures for loan applications in Nigeria. The full list is below;

• Data Encryption
• Identity Verification
• Fraud Prevention
• Data Privacy

1. Data Encryption

This transforms sensitive information into an unreadable format known as ciphertext, it’s also known as a fundamental security measure. With the correct decryption key, this ensures that only you can access the original data. When you are using loan applications, encryption is very crucial for protecting various types of sensitive information:

• Personal Information: Your name, address, contact details, and identification numbers. Encryption is needed for these so they can’t contact you maybe after you break up with them and uninstall their loan app and also a third party can’t have access to your data.
• Financial Data: It involves all employment details, bank account information, transaction history, and lastly your income.
• Biometric Data: Equally your fingerprints, facial recognition data, and other biometric identifiers are required.

Loan platforms significantly reduce the risk of unauthorized access a lot of data breaches, and identity theft, by encrypting this sensitive data. It remains useless to them without the decryption key even if malicious actors intercept or steal encrypted data.

Using Capital One Data Breach (2019) as a Case Study

A lot of personal and financial data of over 100 million customers were totally exposed by hackers that breached the Capital One data system this incident took place In the year 2019, which is so huge. According to studies from the Acm digital library, the data breach happened due to a misconfigured firewall rather than encryption failure, which highlighted the importance of encryption.

This case emphasizes that while encryption is important, it should equally be part of a broader security strategy that includes secure configurations and other protective measures to safeguard your data.

Encryption Methods Used by Loan Platforms

Several encryption methods are commonly employed by loan platforms to protect sensitive information:

SSL/TLS

• SSL (Secure Sockets Layer) and its successor, TLS (Transport Layer Security), are nothing else but cryptographic protocols that ensure a website has secure communication over the Internet.
• They encrypt data transmitted between a web server and a web browser, protecting information like credit card numbers, passwords, and personal details.
• Loan platforms use SSL/TLS to secure online loan applications and data transfers.

Other Encryption Methods

SSL/TLS is indeed the primary protector of any data that’s in transit, but still loan platforms can also use other encryption methods to safeguard data at rest if they really mean business: they are;

• AES (Advanced Encryption Standard): A robust encryption algorithm used to protect data stored on servers and databases.
• Public-Key Infrastructure (PKI): A system for managing digital certificates, which are used to verify the identity of individuals and organizations involved in electronic transactions.

2. Identity Verification

In the lending industry identity verification is such a critical process that needs seriousness. So to ensure that borrowers are who they claim to be and to prevent fraud verification is used. Just for the sake of verifying the identity of their customers loan platforms employ various methods.

Verification Processes

• BVN (Bank Verification Number): The chief cornerstone of identity verification is your BVN and it is commonly known as a unique 11 identification number that connects to all your bank accounts in Nigeria. This is exactly what links your identity as a borrower to their bank account, now this BVN also makes it difficult for fraudsters to operate.
• KYC (Know Your Customer): This process is comprehensive and it equally involves you to collect and verify all of your identification documents which might include passports, national ID cards, and driver’s licenses. The need for this information that they gathered is to confirm a borrower’s identity, address, and other relevant details before working with them.
• Document Verification: To authenticate submitted documents loan platforms often employ document verification technologies. This includes comparing the submitted documents with government databases or using advanced image analysis to detect forgery.

Biometric Authentication

Today almost all our mobile phones are birthed with a biometric fingerprint that reads our palm design to detect if we are the owner before giving us access. you must also know that Biometric authentication adds an extra layer of security by using unique physical characteristics to verify identity. check out some few biometric scanners available;

• Fingerprint Recognition: just like I said in the intro this method involves capturing and analyzing fingerprint patterns to confirm a user’s identity. It is currently being used widely in a lot of smartphones and other devices and can be integrated into loan platform applications which I myself have witnessed.
• Facial Recognition: Just by comparing facial features to a stored template, facial recognition technology can authenticate users by taking a scan of their facial structure to determine who is gaining access if to accept or decline. Due to how convenient and accurate it has been this method is becoming increasingly popular.
• Other Biometric Methods: While less common, other biometric methods like iris scanning and voice recognition can also be employed for enhanced security.

3. Fraud Prevention

To protect themselves and their customers from financial loss loan platforms employ various anti-fraud measures. These measures include:  

Anti-fraud Measures

• Anomaly Detection: This involves the use of algorithms to identify unusual patterns or behaviors in user data. For instance, sudden increases in loan applications, inconsistent information, or unusual transaction patterns can trigger alerts.  
• Risk Scoring: Loan platforms often assign a risk score to each applicant based on various factors, such as credit history, income, and behavioral data. This helps identify applicants who have a high-risk probability of not paying back.
• Device Fingerprinting: loan platforms now detect potential fraudsters only by analyzing a user’s device and browser information, using multiple devices or virtual private networks (VPNs) to mask their identity.
• Machine Learning: To identify complex fraud patterns In today’s world and adapt to evolving threats lenders must use advanced algorithms to analyze vast amounts of data.

Monitoring Suspicious Activities

Loan platforms employ robust monitoring systems to detect suspicious activities in real-time. This involves:

• Real-time Transaction Monitoring: This involves the system identifying unusual patterns that constitute continuous large or multiple transactions within a short period this is done by analyzing real-time transaction data.
• User Behavior Analysis: To detect anomalies, such as rapid loan applications, multiple account creations, or suspicious login attempts monitoring user actions is implemented to curb them.
• Fraud Rule Engines: To flag potentially fraudulent activities a lot of specific rules and regulations are explained to avoid falling victim.  
• Collaboration with Fraud Prevention Services: In the course to access additional data and insights partnering with third-party fraud prevention services is also an option.

4. Data Privacy

The increasing reliance has highlighted the reasons why data privacy on digital loan platforms is very important. Using robust data protection measures is essential to build trust between borrowers and lenders, with a wealth of personal and financial information being collected and processed.

Here are some key provisions of the NDPR that ensure your data privacy:

• Data Minimization: Only collecting the information necessary for your loan application process. Loan platforms cannot ask for irrelevant personal details.
• Data Retention: For a limited period you can safely store your data and securely delete it when you no longer need it again. You don’t have to worry about your pictures or contacts, being contacted later or kept indefinitely.
• Data Security: Because they intend to protect your precious data from unauthorized access robust security measures are initiated, to avoid disclosure or loss. Safeguarding your information is one of their duty that’s why loan platforms have a requirement to have strong security practices in place.
• Transparency: A clear information about how your data is collected, used, and shared is provided. This means that you have the right to understand how loan platforms handle all of your data.
• Consent: They must obtain your explicit permission before collecting and processing your personal data that’s the law. Your data is yours yes, and you equally have rights over them so you completely have 100% control over your information, and loan platforms cannot collect or use it without your consent.

How to Protect Yourself When Borrowing Online

Do you want to borrow a loan? I bet you want to, but I strongly suggest you should wait a little while before you apply for that loan, so that we can talk about how you can protect yourself first. Remember that your personal info is like a goldmine these days, and you wanna keep it safe.

Here’s what you can do:

Be choosy about your lender

Do your research and pick a lender with a good reputation for security because not all loan platforms have equal authorization.

Protect your devices

Make sure your phone and computer are up-to-date with the latest security software. This includes antivirus and anti-malware programs.

Beware of phishing attacks

Don’t click, I mean never should you click on suspicious links or download attachments from emails or unknown numbers that you weren’t expecting. These could be scams designed to steal your information I see them most times in my Android message box.

Monitor your accounts

Keep an eye on your bank and credit card statements for any unauthorized activity. you should be active and keep an eye on your bank account to avoid removing money from it.

Use strong passwords

Create complex passwords I suggest that you make use of alphanumeric combinations for your online accounts and consider using a password manager if you can’t use the manual process of writing them down manually.

Two-factor authentication (2FA)

This is exactly what adds an extra lock to your digital profiles. When you enable 2FA, you’ll need to verify your identity with a code sent to your phone or email in addition to your password. It might be a hassle, but it’s worth it for the extra security.

Spotting Fake Loan Sharks

Not every online lender is on the up and up. Here are some red flags to watch out for:

• Promises that sound too good to be true: If a loan offer seems unrealistically good, it probably is.
• High upfront fees: Legitimate lenders don’t usually charge hefty fees before you get the money.
• Pressure to act fast: Don’t rush into a loan decision. Take your time to research.
• Lack of transparency: If the lender is hiding information or refusing to answer questions, that’s a big red flag.

By following these tips, you can borrow online with confidence. Remember, a little extra caution goes a long way.

Final thoughts

Ensuring robust security measures for your loan applications in Nigeria is essential In this digital age. As highlighted by recent studies above, organizations with strong security training do experience significantly only fewer cyber incidents. This underscores the importance of safeguarding your personal and financial information from the increasing risks of data breaches, identity theft, and fraud.

Your sensitive data such as bank accounts, addresses, and biometric information can be vulnerable when applying for loans online. This is because the impact of a breach can be severe, leading to financial loss, reputational damage, and emotional distress. Therefore, adopting best practices in security is not just advisable but essential.