Bank Fraud — There has been an increase in fraud cases within Nigeria’s banking sector over the past five years, according to a report by SBM Intelligence.
SBM Intelligence, an Africa-focused research firm, said financial losses due to fraudulent activities surged by N14.71 billion from 2019 to 2023.
The June report, published on Thursday, provides a detailed account of the yearly escalation in fraud-related losses.
“Fraud is common in the financial sector globally. In Nigeria, it is endemic. Although the number of incidents has reduced from a high in 2021, the amount of money lost to fraud has increased significantly.
“This may indicate that the perpetrators have become better at their act and figured out ways to move larger sums of money undetected,” SBM said.
Details from the report showed that the sector reported 44,947 fraud incidents resulting in a loss of N2.96 billion in 2019.
This figure more than doubled in 2020, with 101,624 cases leading to losses of N11.61 billion. The upward trend continued into 2021, with 123,918 fraud cases causing a loss of N12.77 billion.
Despite a reduction in the number of fraud cases to 101,669 in 2022, financial losses increased to N14.32 billion. By 2023, the number of incidents further declined to 95,620, yet the total losses soared to an unprecedented N17.67 billion.
The report highlighted various methods through which fraud is perpetrated, such as social engineering, website/server hacking, robbery, PIN compromise, internal collusion, phone theft, and SMiShing (SMS phishing).
Losses due to social engineering rose from N8 billion in 2022 to N9.4 billion in 2023. Similarly, website/server hacking saw losses jump from N6.2 million to N2.4 billion over the same period.
Robbery-related fraud losses escalated from N437.4 million in 2022 to N1.6 billion in 2023, while PIN compromise resulted in losses of N852.3 million in 2022 and N1.3 billion in 2023.
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Internal collusion accounted for losses of N1.5 billion in 2022 and N1.04 billion in 2023. Losses from phone theft rose from N259.2 million in 2022 to N317.7 million in 2023, and SMiShing losses surged from N1.01 million to N30.7 million over the same period.
Additional channels, including fake assistance, missing/lost cards, phishing, lack of two-factor authentication (2FA), card theft, and others, also contributed significantly to the total losses in 2023.
