Nigerian Banks Lose N9.5 Billion to E-Fraud in 8 Months of 2023

The Nigeria Inter-Bank Settlement System (NIBSS) has revealed that banks in the country have suffered a total loss of approximately N9.5 billion in the year 2023. This information was brought to light by Premier Owoih, the Managing Director of NIBSS, during the third-quarter gathering of the Nigeria Electronic Fraud Forum (NeFF) in Lagos.

Premier Owoih was unable to attend the event in person but was represented by Temidayo Adekanye, the Chief Risk Officer of NIBSS. Adekanye underscored the concerning surge in electronic fraud within the nation’s financial sector, specifically highlighting the online gambling industry as a focal point of concern.

Adekanye went on to acknowledge the noteworthy impact of the cashless policy implemented by the Central Bank of Nigeria (CBN) in contributing to the upswing in electronic fraud within the financial sector.

N5.1 billion lost to e-fraud in H1 2023

He 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 increased efficiency has also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion.”

Going further, the MD compared data on e-fraud from the past years to 2023 and emphasized how serious the problem has become to the stability of the financial sector.

E-fraud over the years

In his words,

• “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.”
• “So, as you can see also from the current perspective, from January to July 2023, there has been a slight jump between June and July, a 39 per cent increase with 8,649 with the actual fraud losses in July 2023, we’re looking at N1.2 billion which is a 54 per cent increase over the period. Now as you can see from January in general, we recorded about N2.7 billion in actual fraud losses.”

POS and betting platforms are most effective for cybercriminals.

Mr Adekanye said betting platforms, wallet accounts, or POS agents are the most effective mediums fraudsters are using and those platforms are almost untraceable.

He called for greater verification and identification of POS agents, cryptocurrency accounts, sports betting accounts, etc as the recovery rate of e-fraud across these mediums hovers around 5% nationally.

CBN calls for more education

The Chair of the NeFF who also doubles as the Director of Payment System Management at the CBN Musa Jimoh said financial institutions have no options other than to combat cybercriminals as they can destroy the entire financial system.

He called for more enlightenment and education saying that as more people join the financial system and the volume of transactions increases, there will be room for vulnerability which criminals exploit.