The total amount of money lost to fraudulent activities in Nigeria across payment channels surged by 1,125 percent within a period of three months.
The latest report on Frauds and Forgeries in Nigeria Banks by the Financial Institutions Training Centre (FITC), said the amount lost saw a substantial rise, increasing from N472 million in the first quarter of 2023 to N5.79 billion in the second quarter.
“This increase might be attributed to the fact that banks were liable for the losses incurred and had to make refunds to customers,” it said.
The report also revealed a significant 276.9 percent increase in the total amount involved in fraud cases during Q2 compared to the previous quarter. “The sum increased from N2.58 billion to N9.75 billion.”
“Fraudulent loans accounted for the highest loss at 94.4 percent, with a value of N5.46 billion. Mobile fraud represented 3.39 percent of the total, amounting to N196 million, while computer/web fraud withdrawals accounted for 1.03 percent, totalling N59.5 million,” it said.
According to the Cyber Security Expert Association of Nigeria, Small and Medium Scale Enterprises received the most cyber-attacks in 2022 as phishing attacks (a form of social engineering and scam) rose by 87 percent compared to 37 percent in 2021.
A recent document titled ‘Financial Inclusion and Cybersecurity in the Digital Age’ by Kristalina Georgieva, managing director at International Monetary Fund (IMF), said the world is becoming more reliant on digital financial services; hence the increase in cyber-attacks.
“COVID-19 accelerates our digital advancements, and opportunities are multiplying at an even faster pace. But so are the risks.
“And if we want to harness the great power of technology to lift people up, we need to deal effectively with the threats that can bring technology down and harm lives and livelihoods,” Georgieva said.
Stakeholders in the digital industry say, the growing cyber security threats which can also be associated with fraud activities could ultimately hinder financial inclusion.
Assane Gueye, professor at Carnegie Mellon University Africa, said as more people are moving into the financial inclusion net, we should be mindful of the things that can hinder the successes of it such as cyber security attacks.
He said while we are developing the technologies to include more people, it should be more secure or preserve peoples’ data and privacy and also align with people’s reality. “We should be more intentional that these technologies will bring more good and not harm.
Authors of the FITC report recommend banks should strengthen their security protocols and systems to prevent unauthorized access to customer accounts and sensitive information.
“This may involve incorporating measures such as multi-factor authentication, implementing strong encryption techniques, and ensuring regular security updates are in place,” they said.
They added that banks should ensure there is stability in the cybersecurity units while also equipping the unit members with relevant cybersecurity trainings that helps to mitigate, control and reduce fraud cases.
“Also, banks should utilize advanced fraud detection systems and technologies that can analyse patterns, identify anomalies, and detect suspicious activities in real-time. These systems employ Artificial intelligence and Machine Learning and help identify potential fraud incidents and trigger alerts for further investigation,” they said.