The rise in fraudulent activities across Nigerian banks has become a significant concern, with billions of Naira lost to fraudsters every month, according to the latest Fraud and Forgery Report for Q3 2024, released by the Financial Institutions Training Centre (FITC). The report shows a worrying 65% increase in reported fraud cases, rising from 11,532 in Q2 to 19,007 in Q3 2024.
In addition to the spike in the number of fraud cases, the amount attempted to be stolen also surged dramatically by 105%, reaching N115.9 billion in Q3, compared to N56.6 billion in Q2. Despite the alarming numbers, the actual losses were somewhat lower, with Nigerian banks losing N10.1 billion to fraud in the third quarter—representing a 75.4% reduction compared to the N42.8 billion lost in Q2.
Fraud Losses in 2024 So Far
The report reveals that Nigerian banks have lost an estimated N53.4 billion to fraud in the first nine months of 2024. In Q1, the losses were minimal at N468.4 million, but Q2 saw a major surge, with N42.8 billion stolen, followed by another N10.1 billion in Q3. In total, fraud losses in 2024 already far exceed the total of N9.4 billion lost to fraudulent activities in 2023. This significant uptick in fraud is concerning, particularly as the rise in digital transactions increases the vulnerability of the banking sector.
Types of Fraud on the Rise
The FITC report highlights the growing prevalence of fraud via digital platforms, including computer/web fraud, mobile fraud, and point-of-sale (POS) related fraud. These types of fraud have been increasingly common since 2023 and continue to be the leading methods of attack in 2024. The report also revealed notable increases in card-based fraud (up 54.2%, from 11,237 cases in Q2 to 17,314 in Q3) and cash-related fraud (up 125%, from 228 cases in Q2 to 517 in Q3). However, cheque-related fraud dropped by 48.8%, from 41 cases in Q2 to just 21 cases in Q3.
Concerns from Stakeholders
The rise in fraud cases has sparked concerns among stakeholders in the Nigerian financial sector, particularly regarding the erosion of trust in the financial system. Dr. Chizor Malize, the Managing Director and CEO of FITC, emphasized the urgent need to address the rising fraud, pointing out that digital platforms—such as web, mobile, and POS terminals—have become primary targets for fraudsters. She stressed the importance of leveraging emerging technologies like Artificial Intelligence (AI) to combat cyber threats and digital risks, which are becoming more prevalent with technological advancements.
Dr. Malize also highlighted the need for increased recapitalization in the banking sector to help mitigate fraud and digital risks, ensuring the stability and growth of Nigeria’s financial system. Similarly, Pattison Boleigha, the MD/CEO of Pattison Consulting, called for wider adoption of AI tools and stronger regulatory oversight, advocating for regulators to be trained in these technologies to better address emerging fraud risks.
Favour Femi-Oyewole, the Group Chief Information Security Officer of Access Bank, echoed these concerns, calling for embedded security measures within the financial sector due to consumers’ exposure to various APIs and digital footprints. She also emphasized the need for collaboration among banks to address cyber threats collectively, as the industry faces a common enemy.
Recommendations for Tackling Fraud
As part of the ongoing effort to combat fraud, stakeholders are urging for greater collaboration among banks, enhanced consumer awareness, and improved regulatory oversight. There is also a push for the broader adoption of AI and machine learning technologies to identify and mitigate fraud risks in real-time.
The report underscores the need for a collective approach to combat the rising tide of fraud, with stakeholders from the regulatory bodies, banks, and tech industry working together to ensure a safer financial ecosystem.
