Nigerian Banks Lose N5.79 Billion to Fraud in Q2 2023

FITC’s Q2 Fraud and Forgeries report has brought to light concerning statistics regarding the Nigerian commercial banking sector. In the second quarter of this year, fraud activities dealt a severe blow to commercial banks in Nigeria, resulting in a staggering loss of N5.79 billion.

This shocking figure marks an alarming surge of 1,125.03% when juxtaposed with the N472 million lost during the first quarter of 2023.

The report, compiled by FITC, underscores the grim reality that these losses were incurred by 24 banks that dutifully reported their fraud cases for the specified period. Diving deeper into the data, it is evident that the total financial toll inflicted by fraud cases during Q2 2023 experienced a substantial escalation. The monetary value ballooned from N2.58 billion to an astonishing N9.75 billion, signifying an unprecedented 276.98% upsurge in losses when compared to the preceding quarter.

Fraudulent loans top losses

According to the report, incidences of fraudulent loans accounted for the highest loss at 94.35% with a value of N5.46 billion. This was followed by mobile fraud, which represents 3.39% of the total loss amounting to N196 million.

FITC said Computer/ Web fraud was minimal for the period under review as it amounted to only 1% of the total losses in Q2. N59.5 million was lost through the web in the 3 months.

Decline in volume

Despite the significant increase in the value of fraud in the second quarter, there was a decline in the number of cases recorded compared with the previous quarter.

• “For the second quarter of 2023, a total of 11,679 cases were reported and when compared to the 12,553 cases recorded in the Q1, a 6.96% decrease is noted. The data for the first quarter of 2023 indicates that mobile fraud, computer/web fraud, and POS-related fraud were the three most prevalent types, continuing the trend observed in the first quarter 0f 2023,” FITC stated in the report.

While the FITC data captured both electronics and non-electronics frauds in the banks for Q2 2023 alone, the Nigeria Inter-Bank Settlement System (NIBSS) had recently disclosed that the banks had as of this August lost N9.5 billion to e-frauds alone.

Adding the non-electronic figure to this would mean that over N10 billion have been lost by the banks so far this year.

Strengthening security in banks

Considering the rise in the total amount involved in fraud cases and the amount lost, FITC urged Nigerian banks should strengthen their security protocols and systems to prevent unauthorized access to customer accounts and sensitive information.

According to the organization, this may involve incorporating measures such as multi-factor authentication, implementing strong encryption techniques, and ensuring regular security updates are in place.

• “Also, banks should utilize advanced fraud detection systems and technologies that can analyze patterns, identify anomalies, and detect suspicious activities in real time. These systems which employ Artificial intelligence (AI) and Machine Learning (ML) can help identify potential fraud incidents and trigger alerts for further investigation.
• “It is also important to perform regular audits of internal systems, processes, and controls to identify any vulnerabilities or weaknesses that could be exploited by fraudsters and bank staff,” FITC advised.

FITC is a not-for-profit professional organization, which has the Central Bank of Nigeria (CBN), the Nigeria Deposit Insurance Corporation (NDIC), and all licensed banks in Nigeria as members.