How Red Teaming Future-Proofs African FinTechs

Africa’s FinTech sector entered a major boom in the late 2010s and has maintained growth ever since. With the rise of cryptocurrency exchanges and payment platforms on the continent, McKinsey experts predict that the market will grow to $230 billion by the end of 2025.

This wave of digitalization has made financial services more accessible but equally enticing to threaten actors. For instance, Flutterwave, the Nigerian FinTech, reportedly lost $7 million in diverted funds in 2024. The breach went undetected for a while because the perpetrators were mindful about transfer limits that would trigger fraud checks.

As companies scale, so do their attack vectors. But red teaming is a cost-effective way to discover loopholes in IT systems and patch them. In this article, we’ll explore the urgent need for red teaming exercises in African FinTechs and their benefits.

Why African FinTechs are Prime Targets for Cyberattacks

Africa’s FinTech sector is growing fast, with innovations like digital wallets, mobile money, crypto exchanges, and cross-border payment platforms championing financial inclusion. In 2024 alone, African FinTech startups raised over $1 billion, raking in 47% of total funding secured by startups within the continent.

While this rapid growth has helped boost Africa’s economy, it has also created fertile ground for cybercriminals who view FinTechs as high-value targets, because they process financial data. Moreover, many African FinTechs scale rapidly, often after securing new funding, but their security systems rarely scale at the same speed, exposing them to serious risks.

To remain resilient and keep up with the fast-growing industry, African FinTechs must address key threats like:

• Cloud & Third-party risks: Integrating third-party vendors into a company’s cloud platform or network creates new entry points for hackers, especially if the vendor’s application was not secure to begin with. In the rush to scale, many FinTechs neglect to conduct thorough security evaluations on third-party apps, or leave cloud misconfigurations unchecked, making them easy targets for attackers.
• Regulatory Gaps: To achieve financial inclusion, FinTechs typically operate across multiple African jurisdictions, each with varying data protection and compliance laws. This, in turn, hinders companies’ ability to develop robust security measures that can effectively serve all markets.
• Mobile Money Risks: The growing reliance on mobile banking opens the door to phishing campaigns, SIM swap fraud, and account takeovers targeting both customers and staff.
• Insider Threat: Employees and users with limited cybersecurity awareness are easy attack vectors, as they are prone to social engineering tactics. FinTechs in Africa must prioritize consumer education as well as in-house security training, to improve their security posture.

For cybercriminals, this mix of rapid growth, low consumer education, supply chain vulnerabilities and regulatory complexity creates the perfect environment to launch zero-day attacks. Without proactive security measures like red teaming, African FinTechs risk losing their momentum in the digital economy.

What Is Red Teaming?

In cybersecurity, there are red teams and blue teams. The red team simulates real-world attack scenarios, while the blue team responds to such attacks, conducting triage and executing incident response strategies.

Red teaming is essentially a process where ethical hackers conduct a simulated cybersecurity attack to test an organization’s defenses and identify vulnerabilities. Think of it as a test that determines a company’s overall preparedness for cyber attacks.

For African FinTechs, red teaming must be tailored to the region’s cybersecurity realities—simulating the most common attacks first, before addressing lesser-known threats.

Why red teaming matters: key outcomes and benefits

1. Red teaming exposes critical blind spots.

Red teaming exercises give companies an attacker’s perspective of their networks and systems. By simulating a real attack path, red teams uncover blind spots that traditional audits miss, which cybercriminals could exploit.

2. It improves incident detection and response.

Apart from spotting security gaps, red teaming also evaluates incident response strategies, based on how fast and effective the blue teams are at stopping the simulated attacks. FinTechs’ CISOs can apply insights from these exercises to sharpen in-house threat mitigation efforts.

3. Red teaming equals proactive risk management.

Identifying exploitable attack paths early prevents costly breaches and business disruptions. FinTechs in Africa can also leverage regular red teaming exercises to stay ahead of emerging threats like AI-driven phishing, business email compromise and ransomware-as-a-service.

4. It strengthens regulatory compliance and investor confidence.

Red teaming aligns with regulatory demands in several African countries such as the Protection of Personal Information Act in South Africa. By demonstrating a commitment to data privacy laws through red teaming, African FinTechs can achieve smoother compliance audits. This also assures stakeholders that their investments are secure.

5. Red teaming exercises can create a security awareness culture.

Making red teaming a company-wide exercise involves sharing derived insights with all employees, educating them on how seemingly small errors may contribute to a costly breach. This reinforces the need for vigilance at all levels.

Partnering with the Right Provider to Safeguard African FinTechs

The global cybersecurity talent shortage is real, and it undoubtedly extends to African business sectors. For this reason, many FinTechs lack the in-house expertise to run effective red teaming exercises.

The solution - a trusted cybersecurity partner with local expertise in Africa’s regulatory and infrastructural challenges.

For many legacy enterprises in Africa, outsourcing red teaming is not a priority because they have long-standing protocols and dedicated security operations centres. However, this is not often the case for FinTechs in the region, which, despite experiencing rapid growth, may find building an internal security team considerably expensive.

Outsourcing provides financial organizations with access to advanced cybersecurity functions like red teaming, without the overhead of hiring and training internal personnel.

Providers like Paratus Cybersecurity for instance, bring region-specific expertise, blended with proven methodologies for Africa’s growing FinTech landscape. Paratus offers continuous monitoring, actionable reporting, and cyber advisory services, all of which are critical for industries with rapid growth rates.

Closing thoughts

African FinTechs process millions in daily transactions, and a simple red-teaming exercise can reveal what they stand to lose by leaving security gaps unchecked. Everything from third-party integrations to corporate emails is a potential vector for a cyberattack.

By simulating real attack scenarios, companies in this category can proactively identify risks, improve incident response, and build customer trust in the highly regulated financial sector.

Ready to future-proof your business while contributing to Africa’s growing economy? Contact our cybersecurity experts today to schedule a red teaming demo.