Rising Tide of E-Fraud: Nigerian Banks Face a N9.5 Billion Challenge in 2023

Dive into how Nigerian banks grapple with a staggering N9.5 billion loss to e-fraud in 2023. Discover the reasons, implications, and the road ahead.

Navigating E-Fraud: Challenges in a Digital Era

In our swiftly digitizing world, the rise of frictionless online transactions presents its own set of predicaments.

For Nigeria, the magnitude of these challenges has crystallized into a shocking figure: N9.5 billion lost to electronic fraud (e-fraud) in just the first three quarters of 2023.

Unmasking the Alarm Bells: NIBSS Weighs In

According to the Nigeria Inter-Bank Settlement System (NIBSS), Nigerian banks have seen a staggering N9.5 billion evaporate due to e-fraud activities.

Premier Owoih, the Managing Director of NIBSS, shed light on this during the Nigeria Electronic Fraud Forum’s (NeFF) recent meeting in Lagos.

Significantly, focus has shifted to the expanding online gambling sector as a potential center for fraud.

Cashless Policy: Boon or Bane?

While technology often offers solutions, sometimes it inadvertently creates problems.

The Central Bank of Nigeria’s (CBN) cashless policy might have been one such double-edged sword.

Designed to propel Nigeria into the digital age, it also inadvertently became a catalyst for the rise in e-fraud. The policy’s rise in electronic transactions opened doors for malicious entities to exploit.

E-Fraud Statistics: The Chilling Numbers

E-fraud isn’t new. But, as we see, its volume and impact have magnified over the years.

Let’s delve into the data:

2019: Fraudulent activities cost Nigeria about N3 billion.

2023: By the end of the first quarter, losses reached a concerning N5.1 billion.

July 2023: Just in this month, a 54% increase was witnessed, resulting in a loss of N1.2 billion.

Fraudsters’ Favorite Mediums: Betting and POS Platforms

E-fraudsters have been particularly active on betting platforms, wallet accounts, and Point of Sale (POS) systems.

According to NIBSS’s Chief Risk Officer, Mr. Adekanye, these mediums not only attract cybercriminals but also remain challenging to trace.

He emphasized the pressing requirement for enhanced verification measures in these channels, particularly given the mere 5% national recovery rate.

An Urgent Call to Action: CBN’s Standpoint

The critical state triggered reactions from pivotal figures in Nigeria’s financial realm.

Musa Jimoh, the Chair of NeFF and the Director of Payment System Management at the CBN, was forthright.

He highlighted the existential menace posed by cybercriminals to the nation’s financial ecosystem. His solution?

Intensively informing and educating the public becomes crucial as the financial network expands, highlighting the significance of public awareness.

Combining stringent measures, technology, and public awareness could very well be the triad to turn the tide against e-fraud.

But, with e-fraudsters getting more sophisticated, will Nigeria rise to the challenge?

fore more information /piggybank.ng

FAQs

What is the total e-fraud loss for Nigerian banks in 2023?

Nigerian banks have lost approximately N9.5 billion to e-fraud in 2023.

How has the cashless policy impacted e-fraud rates?

The increase in electronic transactions due to the cashless policy has inadvertently led to a rise in e-fraud.

Which platforms are most exploited by e-fraudsters?

Betting platforms, wallet accounts, and POS agents are among the most targeted.

What is the recovery rate of e-fraud across these mediums?

The recovery rate hovers around 5% nationally.

What measures are being taken to combat this issue?

There are calls for enhanced verification processes, and the CBN emphasizes the need for public enlightenment and education.


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