In the first quarter of 2024, Nigerian banks lost ₦468.42 million owing to fraudulent operations, highlighting the need for enhanced security.
Despite advances in banking technology, fraudsters continue to target vulnerabilities across all financial channels.
The Financial Institutions Training Centre (FITC) emphasizes in its report that, while some progress has been made, there is still a long way to go in combatting these crimes.
Here are the top primary routes via which these losses happened, demonstrating the scope of the problem and the necessity for immediate action to protect banks customers’ financial assets.
1. Web-Based Fraud
In the first quarter, fraud via web channels cost around ₦24.1 million, a 16% drop from the previous quarter. There were 5,392 reported incidents. Criminals utilize sophisticated phishing scams and security breaches to get access to client accounts. Banks should improve their cybersecurity measures and educate their clients on how to identify and avoid phishing efforts.
2. Mobile Banking Vulnerabilities
Mobile banking, while handy, proved to be the most affected, with a loss of ₦216.4 million from 3,173 reported cases. The decrease from the previous period’s ₦21.6 billion indicates a substantial improvement in mobile security. However, the large sum lost demonstrates that mobile platforms remain great targets for fraud. Two-factor authentication and secure banking apps are necessary moves ahead.
3. Point of Sale (PoS) Transactions
Fraud losses in PoS systems decreased by 68% to ₦4.6 million, from approximately 2683 recorded cases. Despite the decrease, physical security of PoS devices and data encryption must be prioritized to prevent skimming and other types of fraud that take advantage of card transactions.
4. In-Branch Banking
Direct operations at bank branches resulted in ₦133.9 million in losses from 399 recorded cases. Identity theft and forgery are examples of fraudulent activity in this context. To prevent these events, banks should tighten in-branch security measures, improve employee training, and implement more severe identification verification methods.
5. ATM
ATMs had the lowest fraud rate, with only ₦100,000 recorded instances compared to other outlets’ 216. Nonetheless, ongoing improvements to ATM security features such as cardless withdrawal choices and biometric authentication should further limit these incidences.
