Nigerian commercial banks have suffered a massive loss of N42.6 billion to fraud within just three months, according to a report released by the Financial Institutions Training Centre (FITC).
The report covers the period from April to June 2024 and reveals a sharp surge in fraudulent activities across banking platforms, marking a significant increase from previous quarters and years.
In comparison, Nigerian banks lost N9.4 billion to fraud throughout the entire year of 2023. The Q2 2024 loss of N42.6 billion represents an alarming 8,993 per cent increase compared to the N468.4 million lost in Q1 2024.
FITC’s report highlights a dramatic rise in fraudulent activities, with various channels, including ATMs, online platforms, bank branches, and point-of-sale terminals, being exploited.
FITC’s data indicates that miscellaneous and other types of fraud accounted for 96.46 per cent of the total losses, amounting to N41.14 billion.
This category dwarfs the losses from fraudulent withdrawals and computer/web fraud, which amounted to N781.2 million and N400.7 million, respectively.
The FITC report, based on fraud returns from 28 deposit money institutions, shows that 80 cases were reported during Q2, with a significant jump in the amount involved.
The sum involved in fraud cases rose by 1,784 per cent, from N2.9 billion in Q1 to an estimated N56.3 billion in Q2.
Computer and web-related fraud saw a 1,560 percent increase in losses, surging from N24 million in Q1 to N400.8 million in Q2. Despite the overall rise, card fraud decreased by 47.66 percent, dropping from 21,469 incidents in Q1 to 11,237 in Q2.
Meanwhile, fraudulent activities involving cheques and cash increased by 36.67 percent and 9.09 percent, respectively.
In terms of channels, bank branches experienced the most significant spike, with losses skyrocketing by 31,497 percent from N133.9 million in Q1 to N42.2 billion in Q2 2024.
However, mobile fraud recorded a decline, with losses decreasing by 59 percent from N216.4 million in Q1 to N88.7 million in Q2.
With these startling figures, the FITC urged Nigerian banks to strengthen their monitoring and auditing procedures.
“Banks should enhance their monitoring systems by utilising AI-driven tools that can flag unusual entries or patterns,” the Centre advised.
They recommended that continuous, automated systems be implemented to detect anomalies in settlement files.
To mitigate further risks, the FITC suggested restricting access to sensitive settlement files to a small, vetted group of personnel trained in the latest security protocols.
“Multi-factor authentication and role-based access controls are essential in reducing the risk of unauthorised access or changes to these files,” the Centre added.
As banks grapple with these alarming losses, FITC emphasised the importance of regular, unannounced internal audits. The audits should focus on settlement processes to promptly identify and address any irregularities.
The recent surge in fraud has sharply highlighted Nigeria’s banking sector’s vulnerability to evolving security threats.
The Centre’s recommendations serve as a crucial roadmap for banks to improve their resilience and curb the rising trend of financial fraud.
