E-fraud: Nigerian Banks’ losses hit N9.5bn in 7 months

*Stakeholders in the financial sector of the Nigerian economy opine the gradual escalation of electronic fraud is beginning to erode consumers’ trust in the financial system, noting the current figure has been projected to reach N20 billion by the end of 2023

Isola Moses | ConsumerConnect

As the volume of electronic fraud perpetrated in the Nigerian banking sector hits over N9 billion, the figure has been projected to reach N20 billion by the end of 2023.

ConsumerConnect  reports the industry regulatory agencies have urged the operators in the financial system to increase the level of collaboration as a way of curbing the rising fraud rate in the country.

Musa Jimoh, Director of Payments System management of the Central Bank of Nigeria (CBN), who doubles as the  Chairman the Board of Nigeria Electronic Fraud Forum (NeFF), speaking at the Annual General Meeting of the forum Friday, August 17, 2023, Lagos, urged enhanced collaboration within the payment system ecosystem to curtail the rise in Electronic Fraud (E-Fraud).

The Nigeria Inter-Bank Settlement System (NIBSS) showed that, while losses to fraud in the financial industry in the Q1 stands at N5.1billion, the figure has so far risen to N9.5 billion as of July 2023.

This brings the total amount lost to fraud since 2019 to N50.5 billion.

Jimoh, speaking on the sidelines of the meeting, said: “We are gathered to see how we can secure our environment, how we can secure our digital environment, and how we can secure cyberspace. We all keep our money in electronic form.

“Today, we are here to continue that conversation to look at new strategies by which we can combat e-fraud.”

Jimoh also warned the industry stakeholders: “If we don’t combat the cybercriminals, they will way us down and disrupt the entire system.

“So, we all need to work together to see how we can make life extremely difficult for cybercriminals.”

The CBN Director of Payments System noted: “We need to look at new ways new techniques, and more efficient manner by which we can improve and guard against the banking and payment infrastructure and educate ourselves on how we can safeguard our bank credentials or tokens and all the information that the banks have provided to us to safeguard.

“The more information we have about what they’re doing, the more we are protected.”

He further disclosed that “the objective is to have zero fraud but you know, this is it’s a gradual process because as you’re building techniques, they’re also exploiting other areas.

“As more people come into the financial sector as more transactions happen, people are vulnerable and so enlightenment education, we would continue to push it which is why it’s going to be a very long journey.

“But I know that with the kind of enlightenment and the push by the bankers’ committee, and other stakeholders a lot of Nigerians will be well educated to know that they have to be have to keep all the accounting details very secret and therefore we anticipate that the incidence of fraud we taper down almost to zero.”

In respect of the menace of cyberfraud in the system, Nneka Onyeali-Ikpe, Managing Director of Fidelity Bank Plc, in her remarks at the forum, observed that the the current amount lost to e-fraud, if the level of fraud is not urgently addressed, over N20 billion will have been lost to fraud by the end of this year.

Onyeali-Ikpe explained the gradual escalation of E-Fraud in the financial system is beginning to erode customers’ trust in the financial system. She emphasised the need for a swift and decisive approach to address E-fraud within the financial sector.

“As technology continues to advance at an unprecedented pace, our reliance on digital transactions has grown exponentially.

“However, with the rise of these digital interactions, the threat of E-fraud has become a significant challenge affecting individuals, businesses, and the industry,” she said.

According to Fidelity Bank Chief Executive, the NIBBS data is that the volume of electronic payment transactions in Nigeria increased by 298 percent Year-on-Year.

Onyeali-Ikpe noted: “The banking industry lost a total of N14.3 billion to electronic fraud in 2022 up from N12.7 billion in 2021.

“As a Q1 2023 is about today is N5 billion and then the problem here is that the trend so far shows that if this continues unchecked, it would rise to N20 billion for the full year.”

How banking industry recorded highest N2.7 billion January 2023: NIBSS

Commenting on the E-fraud data this year, Premier Oiwoh Managing Director of the Nigeria Inter-Bank Settlement System, disclosed the industry recorded its highest actual loss value of N2.7 billion January while June 2023 had the lowest value of over N800 million.

Oiwoh explained the highest fraud count in the last six months was recorded May this year with 11,716 records while the lowest count was  June 2023 with 6,240.

Represented by Temidayo Adekanye, Chief Risk Officer at NIBBS, Oiwoh said: “Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably as the impact of the volume of fraud in the industry itself.

“Now, the increase land efficiency has also meant that fraud has dramatically increased across industry.

For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion.

“For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years.

The NIBSS Chief further said “from the current perspective, from January to July 2023, there has been a slight jump between June and July, a 39 percent increase with 8649 with the actual fraud losses in July 2023, we’re looking at N1.2 billion which is a 54 percent increase over the period.

Now as you can see from January in general, we recorded about N2.7 billion in actual fraud losses.”

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