Bank fraud shoots to N6.2bn on back of electronic channels

Nigerian lenders are caught in an all time high loss of about N6.22billion epayment related fraud in 2014. This remarkable figure represents 1,181.4 percent increase from N485.1million in 2013.

Automated Teller Machine (ATM), Point of Sale (POS), and Web related fraud accounted for the largest chunk of the loss.

According to data at the Nigeria Inter-Bank Settlement System (NIBSS) shown in the latest annual report by Nigeria electronic Fraud Forum (NeFF), ATM related fraud grew from 2013 lows of N54.99million to N2.68billion in 2014, an increase of 4,789 percent. POS terminal related fraud rose by 2,594 percent to N157.61million, from N5.85million; while Web related e-payment fraud rose by 844 percent to N1.031billion as against N109.29million in the preceding year.

Also in the same period, across the counter related bank fraud rose by 917 percent from N13.851million to N140.813million; Internet Banking related fraud rose from N271.762million to N2.120billion, an increase of 680percent.

In addition, E-commerce fraud rose by 323 percent, from N13.948million to N58.994million; Mobile banking fraud rose by 96 percent from N6.787million to N13.328million; whileCheques related fraud declined by 49 percent from a N8.693million to N4.448million.

Based on the figures above, one can infer that e-Fraud is on the increase inNigeria; a continuous threat for which Nigerian banks should strive to keep at the barest minimum.

As a way forward, Nigeria electronic Fraud Forum wants the leadership of each bank to know that the fight against e-Fraud does not only require electronic tools but in addition, a focus on the electronic transaction underlying processes and associated risks.

It urges banks to always implement fit-for-purpose fraud monitoring solutions; overhaul IT security; pay attention to the ‘enemies within’; intensify anti-fraud awareness campaigns; and implement a formidable e-Fraud detection-prosecution process.

In 2011, the Central Bank of Nigeria (CBN) in conjunction with the Bankers Committee, embarked on an ambitious project of transforming the Nigerian retail payments system from over- dependence on cash for transactions, to the adoption of electronic alternatives for payments.

“In the course of this journey, studies also showed that security ranks foremost in the concerns of restakeholders when transiting from cash based system to an electronic platform for payments.

“This concern was further heightened by cultural developments and quicker evolving global trends, which was in favour of embracing technology and convenience in our payments system”, Suleiman Barau, Deputy Governor Operations, Central Bank of Nigeria, said in the NeFF 2014 Annual Report.

Barau said that CBN remains committed to ensuring that the safety and soundness of our financial system is not compromised.

“Our zero tolerance on practices that will undermine the health of our financial institutions remains unshaken. To this end, I assure the Nigeria electronic Fraud Forum of the Central Bank of Nigeria’s support in continuing with this fight against efraud”, Barau said.