Citigroup’s $81 trillion blunder: A wake-up call for Nigerian banks

In April 2024, Citigroup nearly made one of the biggest banking blunders in history, accidentally crediting a customer’s account with $81 trillion.

The mistake, caused by a manual entry error, went unnoticed by two employees before a third spotted it 90 minutes later. It then took hours to reverse.

While no money left the bank, the incident raises serious questions about how such a massive error could slip through the cracks. Nigerian banks should take note, because next time, it might not be caught in time.

Not the first, not the last.

This isn’t the first time Citigroup has messed up. In 2020, the bank mistakenly sent $893 million to Revlon’s lenders instead of a $7.8 million interest payment.

In 2022, a trader added an extra zero to a transaction, triggering a European stock market crash. The result? Millions in fines, regulatory scrutiny, and reputational damage.

Last year, U.S. regulators fined Citigroup $136 million for failing to fix long-standing data management issues.

For a bank of Citigroup’s size and reputation, these errors are alarming. If a global giant can make such blunders, what does this mean for financial institutions in Nigeria, where banking infrastructure and risk controls are still evolving?

Read also: Citigroup helped funnel $3.5bn to UAE state oil company. Is NNPC aware?

A wake-up call for Nigerian banks

Nigeria’s banking sector processes billions of naira in daily transactions. A single mistake on a large scale could shake confidence in the entire system.

Banks must act now to prevent similar disasters. Here’s what they can learn from Citigroup’s error:

Stronger internal checks

Citigroup’s mistake went past multiple employees before being caught. Nigerian banks need to tighten oversight on high-value transactions, ensuring multiple layers of approval actually work.

Less manual entry, more automation

The error happened because someone typed the wrong number. Nigerian banks must reduce manual processes and invest in automated controls to prevent such costly mistakes.

Better regulation and reporting

Citigroup quickly reported the incident to U.S. regulators. In Nigeria, the Central Bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) must ensure that banks have clear reporting processes for operational failures to prevent cover-ups and hidden risks.

Reputation matters

While Citigroup reversed the error, its track record of financial mistakes keeps growing. Nigerian banks must understand that in an era of instant news and social media, public trust is fragile. One big mistake could trigger customer panic and withdrawals.

The real danger: Thinking, “It can’t happen here.”

At Citigroup’s 2024 stockholders’ meeting, CEO Jane Fraser said the bank is fixing its risk controls. But the reality is, these mistakes keep happening. Nigerian banks cannot afford to wait for a disaster before taking action.

With more customers using digital banking and instant transactions, the risk of errors or even fraud is growing.

If a Nigerian bank accidentally wired billions to the wrong account, would it be able to recover the money in time? Would it even notice the error before it was too late?

Learning from Citigroup’s mistakes

Citigroup’s case is a warning, not just a headline. Nigerian financial institutions must tighten controls, reduce manual risks, and improve oversight. In today’s fast-moving financial world, even one mistake can be catastrophic.

Banks that fail to learn from these errors may not get a second chance.

Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).