Latest data released by the Central Bank of Nigeria (CBN) revealed that the banking sector lost over N3.04 billion in 2014 to electronic fraud. The apex bank’s Financial Stability Report (FSR) for December 2014, posted on the regulator’s website stated that the cases of fraud and forgeries in the industry increased to 6,250 at the end of December 2014, from 5,197 reported in the first half of the year.
The study also stated that although the total amount involved in these cases dropped to N9 billion at the end of December 2014 from N16.82 billion recorded in the first half of 2014, the actual losses from the incidents increased to N3.04 billion at the end of December 2014, from N1.72 billion in the first half of 2014. The FSR covered activities in the financial sector between June and December, 2014. The report observed that some of the reported cases of card fraud were perpetrated in jurisdictions with less secure payment platforms.
The report further noted that 2014 was quite alarming in terms of fraud, as it recorded very high volume of fraudulent transactions. Unreported cases, according to the report, were far higher than the reported cases of fraud perpetrated in the system. Internet and automated teller machines (ATMs) is believed to be the most popular channels for e-fraud. In 2013, the fraud cases were 855, with attempted value of N19.149 billion, while actual loss value was N485.194 million.
Despite efforts to ensure that banks adopt global best practices such as the latest version of the Payment Card Industry Data Security Standard (PCIDSS) certification to mitigate the cyber-threat to their systems, the banking watchdog revealed that total losses by the nation’s lenders due to fraud-related cases had gotten to about N203 billion in the last 14 years.
The report also expressed concern that fraudsters are so ingenious these days that they usually find ways of getting around security measures put in place to checkmate their activities. It stated that as many as 20 or 30 persons are often involved in most electronic fraud attempts. Insider involvement also contributes to the success of the electronic fraud attempts.
There is no doubt that this is a major problem that must be seriously tackled. Though not peculiar to Nigeria as other nations face similar challenge, electronic banking fraud is capable of crippling the banking sector. This year alone, several banks in Nigeria have reported less than anticipated profit returns. This may not be unconnected with millions that these fraudsters may have succeeded is siphoning out of the system.
One way out of this challenge is to be ahead of this ingenious fraudsters. To beat these thieves, the nation’s banking sector must invest more in securing their electronic banking system. Hackers thrive on the vulnerability of a bank’s security system. Once the system is weak, it becomes susceptible to attack and subsequently steal funds. There is no doubt that much has been done by banks in this security their system. But a lot more need to be done since fraud cases continue to be on the rise.