Stanbic Bank Uganda Limited is currently facing legal action initiated by Joweria Nakku. She is accusing the bank of failing to protect her savings account, which led to the fraudulent withdrawal of UGX 68 million.
This lawsuit, filed in the Commercial Division of the High Court of Uganda, details Nakku’s claims that between February 7th and 8th, 2023, unauthorized transactions amounting to UGX 68 million were conducted from her account through the Flexi Pay platform — a service she insists she never registered for.
These transactions were reportedly executed using four unknown Airtel lines.
Nakku's lawyers argue that Stanbic Bank’s negligence allowed for fraudsters to access her account. The legal team emphasizes that 28 transactions were made within 24 hours, surpassing the account’s transaction limit.
They say that the bank failed to exercise reasonable care to detect and prevent such suspicious transactions.
This lawsuit raises great concerns about the effectiveness of Stanbic Bank’s authentication procedures and transaction monitoring systems, especially regarding the Flexi Pay service. Nakku’s lawyers allege that the bank’s inability to protect her account equals to a breach of duty, making the bank liable for the total losses incurred.
Stanbic Bank Uganda, one of the leading financial institutions in the country, has been known for its great financial performance and innovative banking solutions.
In 2023, the bank reported a profit after tax of UGX 412 billion, a 15.2 percent increase from the previous year. The bank operates several business units, including retail, business, and investment banking, and has been a big player in Uganda's economic development.
Despite its strong financial performance and market reputation, the allegations brought forward by Nakku highlight potential vulnerabilities in the bank’s digital banking services.
Flexi Pay, Stanbic Bank’s digital wallet service, has seen substancial growth, with the number of wallets increasing from 390,000 to over 840,000 in 2023, generating a transaction value of UGX 464 billion.
However, this growth also emphasizes the necessity for strict security measures to protect customers from fraudulent activities.
Nakku’s case is particularly complex, given that she claims never to have registered for the Flexi Pay service, yet substantial funds were withdrawn from her account through this platform.
The use of four unknown Airtel lines to execute these transactions adds another layer of complexity to the case, raising questions about how these lines were linked to her account and why the bank's monitoring systems failed to flag the unusual activity.
The outcome of this case could have far-reaching implications for the banking industry in Uganda, particularly in terms of the responsibilities of banks to safeguard customer accounts and the adequacy of their fraud detection systems.
As digital banking continues to expand, ensuring the security and trust of these platforms remains a top priority for banks and their regulators.
Stanbic Bank has yet to issue a public statement regarding the lawsuit. However, the bank’s recent financial performance and initiatives indicate a strong focus on innovation and customer-centric services.
In 2023, Stanbic Bank extended the repayment tenure of existing personal loans to up to seven years and created flexible terms for top-up lending, benefiting various customer segments including smallholder farmers, women-owned businesses, and civil servants.
Despite these efforts, Nakku's lawsuit brings to light critical issues that need addressing to maintain customer trust and protect against fraud. As the case progresses, it will be closely watched by stakeholders in the banking sector, regulators, and the public, potentially driving changes in how banks manage digital security and customer protection.
The legal battle against Stanbic Bank emphasizes the need for better security measures in digital banking.
