The Alarming Surge in Bank Fraud
Nigerian banks are grappling with a cybercrime epidemic as they recorded a jaw-dropping ₦53.4 billion loss to hackers in the first nine months of 2024. This figure, revealed in the latest Fraud and Forgery Report by the Financial Institutions Training Centre (FITC), highlights a devastating 468% year-over-year increase compared to ₦9.4 billion lost in the same period of 2023.
Quarterly Breakdown: A Rollercoaster of Cyber Thefts
The FITC report paints a grim picture of escalating losses:
- Q1 2024: The Calm Before the Storm
- Losses amounted to ₦468.4 million, suggesting a relatively quiet start to the year.
- Q2 2024: The Cyber Tsunami
- A record ₦42.8 billion was stolen, marking an astronomical 9,037.5% increase from Q1. Hackers were particularly brazen during this period, exposing vulnerabilities in bank defenses.
- Q3 2024: A Glimmer of Hope
- Losses dropped to ₦10.1 billion—a 76.4% decline from Q2. This suggests that Nigerian banks tightened security measures, mitigating the scale of successful breaches.
Fraud Cases: The Rising Tide of Cybercrime
While the financial losses are staggering, the frequency of fraud attempts paints an even graver picture. Reported fraud cases surged by 65% in Q3 compared to Q2, with hackers attempting to steal ₦115.9 billion—up from ₦56.6 billion in Q2.
Despite the increased attempts, banks managed to block most attacks, losing only 8.7% of the targeted amount in Q3, compared to 75.6% in Q2.
Preferred Tools and Channels for Cyber Attacks
- Fraud Types:
- Computer/Web fraud, mobile fraud, and POS-related fraud dominated the landscape, mirroring trends from previous years.
- Fraud Instruments:
- Bank cards were the top target, with card-based fraud cases rising by 54.2% from 11,237 in Q2 to 17,314 in Q3.
- Cash-related fraud also surged by 125%, with cases jumping from 228 in Q2 to 517 in Q3.
- Exploited Channels:
- ATMs, online platforms (web and mobile banking), bank branches, and POS terminals were heavily targeted by cybercriminals.
Eroding Trust in the Financial System
SEE ALSO: Nigeria Ranks 14th Globally in Terms of Cyberattack Risk
The impact of these cyber breaches goes beyond monetary losses. The Managing Director and CEO of FITC, Dr. Chizor Malize, highlighted how the rising tide of fraud is eroding trust in Nigeria’s financial system. She emphasized that every major transaction channel—whether web, mobile, or POS—has become a target for cybercriminals.
“Businesses are suffering, and consumer trust in financial services is diminishing. There’s an urgent need for banks to address this growing threat,” Malize stated.
Leveraging AI to Combat Cyber Threats
In response to the escalating crisis, FITC has convened industry stakeholders to explore the use of Artificial Intelligence (AI) in combating fraud. Malize stressed that emerging technologies are critical for mitigating digital risks exacerbated by advancements in cyber capabilities.
“As this Fraud Risk Report underscores, leveraging AI is not optional; it is imperative for stabilizing the financial system,” she added.
Collaboration: A Unified Front Against Cybercrime
Favour Femi-Oyewole, Group Chief Information Security Officer at Access Bank, called for greater collaboration among financial institutions.
“When it comes to cybersecurity, we are all facing the same enemy. Competing in this area is counterproductive—we need to work together,” she urged.
Femi-Oyewole also advocated for integrating machine learning into fraud detection systems, enabling banks to proactively identify threats and close security gaps.
The Way Forward: Proactive Solutions for a Growing Crisis
With cybercrime showing no signs of abating, Nigerian banks must adopt a multi-faceted approach:
- Enhanced Training and Awareness: Upskilling employees to recognize and prevent cyber threats.
- Investment in Technology: Deploying AI and machine learning to strengthen fraud detection and prevention.
- Public-Private Partnerships: Collaborating with regulators, law enforcement, and cybersecurity experts to develop industry-wide solutions.
- Customer Education: Empowering customers with tools and knowledge to safeguard their personal data.
The Stakes Are High
The battle against cybercrime is no longer optional for Nigerian banks. With billions at stake and consumer trust hanging in the balance, the financial sector must act decisively to curb the growing menace of cyber fraud. As hackers continue to evolve their tactics, so too must the defenses of the institutions they target.
