Need for banks to invest in technology, people for e-Fraud reduction

Presently, electronic fraud (e-Fraud) spurred by self-service banking and economic pressures and invigorated through technological advances has become a source of pain to almost too many homes in Nigeria, according to Uduak Udoh, chief internal auditor, First Bank of Nigeria Limited.

Victims of exploitation of e-Fraud vulnerabilities have continued to cut across the poor, rich, small and big organisations, and it is not going to abate but increase as it is seen by outlaws as quick means of enriching oneself, almost risk free and requires low capital investment to execute.

Electronic fraud vulnerabilities are shape-shifting bodies with complex web of primordial and emerging threat vectors and malicious actors. Like liquid, it keeps taking the shape of its container.

This is more intriguing as inherent in every old or new electronic product or service offered by banks are vulnerabilities unimagined before release to customers. That is, some of these vulnerabilities are never anticipated or discovered until exploited by criminals, who have extremely high vulnerability identification IQ than the bank customers.

Consequently, the value of reported e-Fraud by deposit money banks (DMBs) rose by 1181.1 percent to N6.2 billion in 2014 from N485.2 million in 2013.

A breakdown of fraud by channels shows that in 2014, automated teller machines (ATMs) were the major victim of fraudulent activities in terms of volume, as it experiences the highest number of fraudulent transactions.

However, internet banking accounted for a loss of about N3.2 billion to fraudulent transactions in terms of value. It is in consideration of this that the Nigeria electronic Fraud Forum ( NeFF) is beaming its searchlight on e-Fraud vulnerabilities.

Meanwhile, the Central Bank of Nigeria (CBN) has recommended the setting up of an independent Nigeria Banking Risk Information Centre (NIBRIC).

Dipo Fatokun, chairman of NeFF, says this should be owned by the banks but CBN should orchestrate it, saying this centre should be not-for-profit and be wholly dedicated to managing banking risk with special focus on fraud.

He says the first phase of NIBRIC should be commercial crime and the immediate setting up of a forensic laboratory and a Security Operation Centre (SOC), saying “our theme has been set on “e-Fraud: Shining a light on insider abuse” and I believe that the deliberations of today will nip the ugly trend of insider related fraud in the bud.” Fatokun is also the director, banking and payments system department, CBN.

Uduak Udoh, chief internal auditor, First Bank of Nigeria Limited, says short of monitoring an employee or contractor’s every move with surveillance cameras, there are steps that can be taken to reduce the risk. “Each organisation has to decide how much loss they are willing to tolerate, as each of these areas requires an investment, in some cases substantial investments that may outweigh the benefits. Even with these controls in place, there will still be the residual risk of user carelessness or of those angry users who are determined to circumvent the system. Thoughtful implementation of some or all of these controls can deter, prevent, detect, or reduce the ultimate impact of the incident,” he says.

Nath Ude, executive director, FCMB, notes the need for the financial services sector to deploy appropriate prevention and detection technologies such as CCTV monitoring, electronic access cards with pre-authorisations, network access control, and enterprise fraud monitoring tools, among others.

There is also the need for banks to invest in developing people, recognise the level of trust in the society, impart superior civilisation, inculcate empowering competence, and among others, help individuals grow integrity.

 

HOPE MOSES-ASHIKE