Stakeholders in Nigeria’s financial sector are expressing concern over the increasing cases of fraud in banks, with billions of Naira being lost to fraudsters every month.
This follows the release of the Financial Institutions Training Centre fraud and forgery report for Q3 2024, which highlights a significant rise in both the number of fraud cases reported by banks and the amount of money involved.
The report reveals that fraud cases reported by Nigerian banks surged by 65%, from 11,532 in Q2 to 19,007 in Q3.
There was also a significant increase in the amount involved in fraud, with attackers attempting to steal N115.9 billion in Q3, a 105% rise compared to N56.6 billion in Q2.
However, the FITC report states that only N10.1 billion was actually lost to fraudsters, a 75.4% decrease from the N42.8 billion lost in the previous quarter.
Based on the FITC Fraud and Forgery reports for Q1, Q2, and Q3, Nigerian banks have lost an estimated N53.4 billion to fraud in the first nine months of the year.
The reports show a minimal loss of N468.4 million in Q1, but fraudsters made a major gain in Q2, stealing N42.8 billion, and followed it up with N10.1 billion in Q3. This marks a significant increase compared to the total N9.4 billion lost to fraud throughout last year.
Expressing concerns over the situation, the Managing Director and CEO of FITC, Dr. Chizor Malize, emphasized the urgent need to address the rising cases of fraud, as it is eroding trust in the financial system.
Malize said, “The increasing rate of fraud affects businesses and it is eroding the trust of the financial service sector. All the channels we use for transactions today; web, computer, mobile, and PoS, among others have become targets of fraudsters.”
She explained that this is why the FITC recently gathered key stakeholders to assess the risks and explore how the industry could leverage Artificial Intelligence (AI) to tackle the problem.
According to her, emerging technologies like AI will be crucial in combating the rise of cyber threats and digital risks, which have been worsened by technological advancements.
“As the Fraud Risk Report underscores, there is an urgent need for leveraging AI to mitigate risks and bolster the stability of the financial system,” she said.
Dr. Malize also emphasized the importance of recapitalization in tackling fraud and digital risks to ensure the stability and growth of Nigeria’s banking sector.
Similarly, MD/CEO of Pattison Consulting Limited, Mr. Pattison Boleigha, advocated for the broader adoption of AI tools and software to combat financial fraud.
He stressed that governance and regulatory oversight are crucial to ensuring that financial institutions uphold proper security practices.
He also called for training regulators on these technologies and emphasized the need for increased consumer awareness. Additionally, he highlighted the importance of collaboration between consumers, operators, and regulators to effectively combat fraud.
The Group Chief Information Security Officer of Access Bank, Mrs. Favour Femi-Oyewole, noted the need for embedded security in the financial sector due to consumers’ exposure to various APIs and multiple digital footprints. She called for the widespread implementation of machine learning to tackle growing financial challenges and prevent potential risks.
Femi-Oyewole said, “We can compete on models, we can compete on strategies, on objectives and all that. When it comes to cyber security, we are all faced with the same common enemy.”
The FITC report for Q3 is based on fraud and forgery returns from 30 deposit money institutions. According to the FITC, 81 such returns were received in the quarter under review.
Further analysis reveals that 26 reports were submitted in July, while 27 reports were received in both August and September.
