25 February 2022 |
Fintech’s Role in Ukraine
The UK, US, EU, Japan, Australia, and others have ramped up sanctions against Russia, including financial sanctions against its banks and individuals.
UK fintech company Wise has already placed restrictions on money transfers to Russia following the country’s invasion of Ukraine.
What’s at Stake
This will likely be a story I report on continuously, but to start I wanted to dive into fintech’s role in Ukraine to understand the scope of the progress severely at stake.
In 2010, Ukraine was among 55 countries across the world that made public commitments to advancing financial inclusion, making fintech development a top priority. Since then, fintechs have been clustered around the capital, with 82% of companies based in Kyiv.
Of all fintechs, 27% are headed or cofounded by women. Globally, only 12% of fintechs are founded by women and only 6% of fintechs have female CEOs.
It wasn’t until 2015 that the majority (58%) of fintech companies launched in Ukraine, mostly focused on payments and money transfers. Fintech started to really draw attention in 2017 after a series of fintech forums and events started.
Today, there are 235 fintech startups in Ukraine. These companies mostly facilitate payment and money transfers (31.6%), provide infrastructure and enabling technologies (19.3%), and digital lending (14% of fintechs).
Large and SMBs account for the majority (74%) of fintechs’ customer base in Ukraine, while individuals accounted for 21% of fintech customers. The growing numbers of potential fintech clients are migrant workers and their families, opening borders with the EU for Ukrainian citizens allowed for work migration thus creating a new target group for transfer services.
Blockchain and crypto assets have also trended in Ukraine. The National Bank of Ukraine has committed to pilot activities to determine if blockchain technology can support its currency.
It’s heartbreaking that Ukraine has been invaded. Lives will be lost, families making progress in their financial futures will fall back, and fintech initiatives will take a backseat as people fight for their lives.
Every organization in the world is at risk of cyberattacks and potentially catastrophic scenarios. The current environment presents an opportunity to think twice about your fintech company’s current security measures.
In order to manage, businesses should have action plans in place for a degraded environment, like a Plan B if communications and systems fail due to an uncertain event. It’s critical to have a plan, like who will make immediate decisions, when the centralized command or control system is compromised.
That response plan should include contact information for local FBI field offices and a cybersecurity response team as well as alternative methods of communication in case it’s difficult to get in touch with these incident response experts.
In the increase of fintech, a lot of firms have adopted technologies that they have not clearly vetted from a security perspective. There are actions tech-driven firms can do today to prepare for something catastrophic to occur:
First, review the cloud security of vendors. Almost all information is in the cloud, and firms should be consistently reviewing what that cloud security looks like. An expert tip: Ask vendors if they have artificial intelligence to monitor potential threats.
Look at what data encryption is put in place within your firm’s partners. Having strong data encryption protects data confidentiality by converting it to the encoded information. Another practice is limiting the number of people that have access to a firm’s server.
When reflecting on catastrophic events, it’s worth thinking of other emergency responders, like firefighters or even the military. Those experts are training every day. Organizations should do the same.