Nigerian commercial banks have been hit hard, with a staggering N42.6 billion lost to fraud over just three months, according to a recent PulseNets report from the Financial Institutions Training Centre (FITC). This figure, covering April to June 2024, marks a dramatic escalation in fraudulent activities across banking platforms, a stark contrast to previous periods.
The FITC’s findings reveal a sharp rise in losses compared to 2023, where banks reported N9.4 billion in fraud throughout the entire year. The second quarter of 2024 alone saw an eye-watering 8,993 percent increase, with losses surging from N468.4 million in Q1 to the unprecedented N42.6 billion.
The report, which PulseNets reviewed, indicates that various banking channels, including ATMs, online platforms, bank branches, and point-of-sale terminals, have been heavily exploited. Notably, miscellaneous and other types of fraud constituted a whopping 96.46 percent of these losses, totaling N41.14 billion. This category overshadows losses from fraudulent withdrawals and computer/web fraud, which amounted to N781.2 million and N400.7 million, respectively.
PulseNets spoke to FITC, who disclosed that 80 cases of fraud were reported during Q2 2024, with the sum involved soaring by 1,784 percent—from N2.9 billion in Q1 to an estimated N56.3 billion in Q2. Computer and web fraud saw a staggering 1,560 percent increase, climbing from N24 million in Q1 to N400.8 million in Q2. In contrast, card fraud incidents decreased by 47.66 percent, falling from 21,469 in Q1 to 11,237 in Q2.
Fraudulent activities involving cheques and cash also rose, increasing by 36.67 percent and 9.09 percent, respectively. Bank branches experienced the most dramatic surge, with losses exploding by 31,497 percent—from N133.9 million in Q1 to N42.2 billion in Q2 2024. On the other hand, mobile fraud saw a 59 percent decrease, with losses dropping from N216.4 million in Q1 to N88.7 million in Q2.
In response to these alarming figures, FITC has urged banks to bolster their monitoring and auditing measures. The Centre advised, “Banks should enhance their monitoring systems by utilising AI-driven tools that can flag unusual entries or patterns.” FITC also recommended implementing continuous, automated systems to detect anomalies in settlement files and suggested restricting access to these files to a select group of personnel trained in advanced 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 FITC added. The Centre further stressed the importance of regular, unannounced internal audits focusing on settlement processes to quickly identify and address irregularities.
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As the banking sector grapples with these unprecedented losses, FITC’s recommendations offer a crucial roadmap for improving resilience against the evolving threat of financial fraud. The effectiveness of these measures in curbing the rise of such fraudulent activities remains to be seen.
