Banks in Nigeria have reportedly lost a whopping sum of N9.5 billion to electronic fraud in the first Eight (8) months of 2023.
This was reported by the Managing Director of the Nigeria Inter-Bank Settlement System (NIBSS) Premier Oiwoh, at the Nigeria Electronic Fraud Forum (NEFF) third-quarter general meeting held in Lagos on Friday. The meeting was focused on the theme “New Strategies for Combating e-Fraud in a cashless environment”.
Speaking at the meeting, NIBSS Managing Director, Premier Oiwoh, who was represented by Chief Risk Officer at NIBSS, Temidayo Adekanye expressed concerns at the dramatic increase of electronic fraud in the country, following the Central Bank of Nigeria (CBN) gradual transition to a cashless society.
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He said,
“Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably as the impact of the volume of fraud in the industry itself. Now, the increased efficiency has also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was N5.1 billion.
“For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years. So, as you can see also from the current perspective, from January to July 2023, there has been a slight jump between June and July, a 39 percent increase with 8,649 with the actual fraud losses in July 2023, we’re looking at N1.2 billion which is a 54 percent increase over the period.
“Now as you can see from January in general, we recorded about N2.7 billion in actual fraud losses. What we see most is the fact that the primary channels are the betting platforms. So once the money hits the betting platform or a wallet account or in some cases POS agents once it’s cashed out, it is a black hole. There is no way you can recover that money. We’re talking about potentially five percent recovery rates across the industry. So, we all have to identify those betting and wallets accounts, POS agents, cryptocurrency accounts, and in some cases purchases.”
Also speaking at the event, the Chairman of NeFF and Director of Payment Systems Management at the CBN, Musa Jimoh, implored all relevant stakeholders to join hands on deck to combat the increased rates of electronic fraud bedeviling Nigerian banks.
He further stated that the objective is to have zero fraud, but he believes it would be a gradual process to achieve that.
Notably, Electronic fraud in Nigeria has become a major concern in Nigeria, following the CBN’s gradual transition to a cashless society. As a large percentage of individuals now engage more in online transactions and electronic payments, cybercriminals have then targeted these electronic means, making it easier for them to execute e-fraud schemes.
These criminals go as far as creating fake apps or websites that mimic legitimate payment platforms to steal users’ credentials and financial information. Following Nigeria’s transition to a cashless society, people might be more likely to download and use these fraudulent apps, thinking they are legitimate.
To mitigate the risks associated with increased e-fraud in a cashless environment, the government, financial institutions, and individuals need to take proactive measures. This includes Education and Awareness, Strong cybersecurity, User Training, Regulations, and Consumer Protection, amongst others.
While the move towards a cashless society can bring many benefits, addressing the potential rise in -fraud requires a multifaceted approach.