Concerns as fraudsters increase attacks on banks, N115.9 billion on target in Q3 2024 

Stakeholders in the Nigerian financial sector are worried about the rising cases of fraud across banks with billions of Naira being lost to fraudsters on a monthly basis.

These concerns stem from the latest fraud and forgery report for Q3 2024 released by the Financial Institutions Training Centre (FITC), which shows a spike in reported fraud cases by banks and the amount involved in fraud.

According to the report, fraud cases reported by Nigerian banks jumped by 65% from 11,532 in Q2 to 19,007 in Q3.

Similarly, there was also a spike in the amount involved in fraud as the attackers attempted to steal N115.9 billion in the third quarter, marking a 105% surge compared with N56.6 billion recorded in Q2.

However, only N10.1 billion were lost to the fraudsters according to the FITC report, representing a 75.4% decline in loss compared with the N42.8 billion recorded in the previous quarter.

Over N53 billion lost to fraud in 9 months 

Going by the FITC Fraud and Forgery reports for the first, second, and third quarters of the year, Nigerian banks have lost an estimated N53.4 billion to fraud in the first nine months of the year.

  • While the reports show a minimal loss of N468.4 million in Q1, the fraudsters won big in Q2 carting away N42.8 billion in Q2, while topping it with another N10.1 billion in the third quarter.
  • This shows a significant surge in losses compared with the total of N9.4 billion lost to fraudulent activities throughout last year.
  • The reports further confirm the escalation of fraud across all platforms, with the rise of digital transactions further amplifying the risks.

Stakeholders seek solutions 

Expressing concerns over the situation, the Managing Director and CEO of the FITC, Dr, Chizor Malize, emphasized the urgent need to tackle the rising cases of fraud as it is currently eroding the trust in the financial system.

“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 said that was why the FITC recently brought together key stakeholders to assess the risks and see how the industry could leverage Artificial Intelligence (AI) to address the problem.

According to her, emerging technologies like AI would play a critical role in combating the rise of cyber threats and digital risks, which have been exacerbated by advancements in technology.

“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 stressed the importance of recapitalization in addressing fraud and digital risks to ensure the stability and growth of Nigeria’s banking sector.

  • Similarly, the MD/CEO of Pattison Consulting Limited, Mr. Pattison Boleigha, advocated for the wider adoption of AI tools and software to counter financial fraud.
  • According to him, the issue of governance and regulatory oversight are also very key to ensuring that all financial institutions are doing the right things in terms of security.
  • To that end, he urged regulators to be trained on these technologies while calling for increased consumer awareness and collaboration between consumers, operators, and regulators to combat fraud effectively.
  • Mrs. Favour Femi-Oyewole, Group Chief Information Security Officer of Access Bank, also highlighted the need for embedded security in the financial sector due to consumers’ exposure to diverse APIs and multiple digital footprints. She called for broad-based implementation of machine learning to address the growing financial challenges and avert potential risks.

Emphasising the need for collaboration among banks to tackle the menace, 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. So, that means we have to collaborate.” 

What you should know 

The FITC report for Q3 is based on returns on fraud and forgery received cases from 30 deposit money institutions.  According to the FITC, 81 of such returns were received in the quarter under review.

Further analysis shows that twenty-six (26) reports were submitted in July, while twenty-seven (27) reports were received in both August and September.

A deep dive into the report shows that Computer/Web fraud, Mobile fraud, and POS-related fraud were the most prevalent types of fraud in the third quarter, following a trend that has persisted since 2023 and continued into the first two quarters of 2024.

  • Meanwhile, the report shows that fraud was conducted through multiple channels in Q3, including ATMs, online platforms like web and mobile banking, bank branches, and POS terminals.
  • Among the instruments used, card-based fraud witnessed a notable increase of 54.2%, rising from 11,237 cases in Q2 to 17,314 in Q3, while cash-related fraud cases, also rose by 125%, climbing from 228 cases in Q2 to 517 in Q3.
  • In contrast, cheque-related fraud dropped by 48.8%, decreasing from 41 cases in Q2 to 21 in Q3.

Source: TheTimes.com.ng.