Manipulation forms 56% of N5.2bn banks lost to online crime in 2020

Online criminals in 2020 made away with N5.2 billion from digital banking channels such as the web and mobile, mostly through a technique known as social engineering.

Social engineering is the psychological manipulation of people to gain confidential information. In the case of Nigerian banking customers, it involves receiving emails from online criminals or fraudsters pretending to be banking personnel.

According to experts at Tellimer Research, social engineering accounted for 56 percent of all reported fraud attempts. They, however, acknowledge that the N5.2 billion loss is only 1 percent of the profits commercial banks recorded within a nine-month period in 2020, and 0.03 percent of customer deposits.

“The worry lies in the cybersecurity risk it poses to banks as more customers adopt their digital banking platforms and the long-term consequences for earnings,” experts say.

Social engineering has over time proven to be more successful for criminals looking to ‘get inside’ an organisation. The fraud attempts during 2020 had a 93-percent success rate. On many occasions, criminals will take weeks and months to get to know a place or a customer before even coming in the door or making a phone call. Their preparation might include finding a company phone list or organisational chart and researching their targets on social networking sites like LinkedIn or Facebook.

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After investigating the target, the social engineer or attacker attempts to gain trust and provide incentives or stimuli for subsequent actions that break security practices, like exposing sensitive information or granting access to critical resources.

Social engineers’ biggest tool is human error instead of vulnerabilities in software and operating systems. Mistakes made by legitimate users are much less predictable, making them harder to identify and thwart than a malware-based intrusion.

The experts at Tellermer say the continued rise of social engineering fraud can sabotage the growth in digital banking adoption, especially recorded in 2020. In 2020, the banking industry saw a 303-percent year-on-year expansion in the volume of transfers using mobile phones, a 50-percent year-on-year growth in Point of Sale (PoS) transactions, and a 77-percent increase in the volume of online transactions done through the Nigerian Inter-Bank Settlement System (NIBSS).

It will also impact individual banks that have invested heavily in digital channels and are just beginning to reap the benefits. Access Bank recorded an average growth of 41 percent in transaction volumes from its e-banking channels (USSD, ATM, Mobile, and web), First Bank recorded a 29-percent year-on-year growth (mobile and USSD), while transactions grew by 82 percent year-on-year (mobile, web, and USSD) for FCMB.

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