Nigeria’s $1trn transactions to get new AI-based defence

Nigeria’s regulators and financial institutions will look to artificial intelligence tools to secure the country’s $1 trillion worth of electronic transactions.

The urgency is clear, with over N59 billion lost to fraud in the past five years. New measures include geofencing Point-of-Sale (PoS) terminals, an Application Programming Interface (API) to identify recycled SIM cards, and shortening unused SIM ownership periods from six months to three months.

These were revealed on Wednesday at BusinessDay’s 2024 Future of Payment and Fraud Conference, ‘Navigating the Future of Payment and Fraud: Harnessing AI’s Potential and Addressing its Challenges.

According to the Central Bank of Nigeria, as of December 2022, total electronic payment transactions in Nigeria were worth N1.55 quadrillion. These measures, in collaboration with existing ones, are geared towards safeguarding the country’s payment landscape.

However, Efemena Ogie, head of partnerships at Moniepoint, explained that the country’s landscape can currently self-protect.

“The Nigeria Inter-Bank Settlement System (NIBSS) has this ability. However, it is not an API but a portal; hence, it is manual and causes delays.”

When commenting on the CBN’s regulatory activities, Ogie noted that the operations of PoS machines will soon be location-restricted. According to him, PoS machines are being leveraged heavily for fraud, which has not gone unnoticed by the apex bank. To address this, these machines will only be able to work in designated locations they have been registered to soon, making tracking fraudulent transactions easier.

He also highlighted that fintechs can currently tell when SIMs have been recycled, and conversations are ongoing with regulators to make this more mainstream.

SIM recycling is a major fraud enabler, according to the representative of Aminu Madia, executive vice chairman of the Nigerian Communications Commission, and Babagana Digma, head of the New Media and Information Security Department of the NCC.

SIMs that have been lost or stolen and were not retrieved by their original owners become tools in the hands of fraud actors. While these SIMs do not carry the subscriber information to the original owner, they are still attached to every other service the original subscriber opted in for.

“Telcos clear the information that they can. But the other services, like the ones with banks, are still there,” he explained. This exposes subscribers to fraud unsuspectingly, but experts at the event said that the new step by fintechs and operators can help curb this menace.

Digma highlighted that the NCC has been proactive in its fraud measures, especially since mobile devices are the main gateway for fraud.

“We are looking at threats, we are looking at so many of those things that come into the mobile network operators, and anyone that is related to financial institutions, we escalate to relevant authorities to deal with,” he said.

The arrival of AI is transforming fraud detection. Babatunde Obrimah, chief operating officer of the Fintech Association of Nigeria, said, “Being able to track data in real time has made it possible to trigger fraud alerts by identifying irregularities in customers’ payment behaviour. But this calls for the upskilling of current tech and fintech talents.”

Enyioma Madubuike, chief Legal and Compliance officer, Kora, stated, “Both government and financial institutions have to be proactive with pattern analytics.”

Suzan Fasipe, head of Retail Payments at Interswitch Group, noted that sophisticated AI detection systems coupled with existing systems are commonplace in the digital payment landscape.

Buttressing this, Ogie of MoniePoint said, “At MoniePoint, we are always watching out for these things even before they happen. Our systems have been programmed to detect fraudulent transactions before they are carried out.”

Nkebete Mesele, senior director, Solutions Management Visa Sub-Saharan Africa, continued, “Visa is not a customer-facing institution but a bridge to connect payments. Over the years, we have moved to now being able to detect fraudulent transactions even before they pass through our payment wall.

Elizabeth Ekanem, head of Customer Experience at Kuda, added, “At Kuda, we have a social media presence that allows us to monitor the activities of social media users, especially those with deceptive attributes, which tend to lead to deceptions and eventually fraudulent transactions.”

Despite the stride made with fraud detection, experts argued that the financial landscape is moving faster than the regulations available.

“While regulations from the COVID-19 era still exist now, the landscape has moved steadily past the regulations that were set,” they said.

Oguzi Moses, assistant commander of the Economic and Financial Crimes Commission, stressed the need for collaboration between operators and regulators.

“We can do little or nothing without collaboration in tech, commercial banks, and the CBN.”

AI will play a crucial role in shaping the payment landscape of the world and Nigeria, but Nanbaan Pwapo, a digital security professional at Resilience Technologies, noted that there needs to be a conscious effort towards ethical AI applications in the space.