In the three months between April and June of this year, Nigerian banks lost N42.6 billion due to an increase in fraudulent activity throughout the country’s banking networks.
In its recently released Q2 2024 Fraud and Forgeries report, the Financial Institutions Training Centre (FITC) disclosed this information.
The sum lost in Q2 2024 alone exceeded the total amount lost by the banks due to fraud in the entire year 2023, even without factoring in the Q1 record.
According to an analysis of FITC’s data from the previous year, the banks lost N9.4 billion in total.
Comparing the Q2 loss to the N468.4 million lost in Q1 2024, there is an 8,993% rise in loss on a quarter-over-quarter basis. In addition, this is a 637% rise over the N5.7 billion loss that was reported in the second quarter of 2023.
According to FITC, of all the fraud categories, “miscellaneous and other fraud” types accounted for the greatest loss, amounting to N41.14 billion, or 96.46% of the total amount lost.
Losses from computer/web fraud and fraudulent withdrawals, totaling about N781.2 million and N400.7 million, respectively, came next.
Amount At Stake
The overall amount involved in fraud cases increased by an astounding 1,784% between Q1 and Q2 of 2024, from N2.9 billion to around N56.3 billion, according to the FITC data.
Fraudulent operations were conducted through a number of channels in the second quarter of 2024, including point-of-sale (POS) terminals, bank branches, ATMs, and internet platforms like web and mobile banking.
Card fraud saw a notable decline among the instruments used, falling by 47.66%. from Q1’s 21,469 to Q2’s 11,237.
On the other hand, there was a 36.67% and 9.09% increase in fraudulent activity using checks and cash, respectively. The number of instances involving checks grew from 30 in Q1 to 41 in Q2, while the number of cash cases increased from 209 in Q1 to 228 in Q2.
Individual-Channel Losses
A more thorough examination of the data reveals a marked increase in the amount lost across every channel, with the exception of mobile fraud, which saw a decrease.
The amount of losses incurred through bank branch-related channels increased by 31,497% from N133.9 million in Q1 2024 to N42.2 billion in Q2.
Furthermore, losses from computer and web frauds increased dramatically by 1,560%, from N24 million to N400.8 million.
Nevertheless, the amount lost as a result of ATM-related fraud was not disclosed.
As was previously mentioned, there was a 59% decrease in the amount lost due to mobile fraud from N216.4 million in Q1 2024 to N88.7 million in Q2 2024.
Strengthening the security of financial platforms
The FITC suggested that banks improve their monitoring and auditing processes in light of the startling rise in fraud losses.
The Centre claims that deposit money institutions can build up automated monitoring systems that can identify irregularities or discrepancies in settlement files by using AI-driven technologies that highlight odd entries or trends.
Furthermore, it is possible to carry out routine, covert internal audits with a particular focus on settlement procedures in order to spot and quickly resolve any abnormalities.
“Access controls should be strengthened by restricting settlement file access to a small, approved group of individuals who have been cleared and are routinely trained on the most recent security protocols.”
“Role-based access controls (RBAC) and multi-factor authentication (MFA) can help reduce the risk of unauthorized changes to settlement files,” according to FITC.
What To Note
The twenty-eight (28) deposit money institutions in the nation provided returns on fraud and forgery instances, which served as the basis for the FITC report.
Eighty of these returns, according to FITC, were received during the quarter that was examined.
Twenty-seven (27) reports were received in both May and June, according to additional analysis, whereas twenty-six (26) reports were made in April.
