Stakeholders demand better security as banks lose N42.6bn to fraud

Cybersecurity experts have stated that Nigerian banks must bridge the widening technology adoption gaps and closely track insider threats after losing N42.6bn to fraud between April and June 2024.

The Financial Institutions Training Center revealed the loss in its Q2 2024 Fraud and Forgeries Report, noting that the figure surpassed the total fraud-related losses recorded by Nigerian banks throughout 2023.

Cybersecurity researcher Madumere Chukwuka from King’s College London told The PUNCH that certain financial institutions have not kept up with evolving cyber threats, making them prime targets for fraudsters.

He said that many fraud cases originated internally, with bank employees exploiting gaps in internal controls and auditing systems.

“Insider threats remain a significant issue. No matter how advanced the technology, human involvement in banking processes is often a weak link,” he noted.

Despite considerable investments in cybersecurity, banks were not fully integrating or utilizing available tools, Chukwuka said.

“The technology exists, but it is underutilized. “Overlapping roles and system inefficiencies further reduce the effectiveness of these tools.”

He added that the complexity of fraud schemes, such as inserting fictitious amounts into settlements, made it difficult for banks to detect fraud in real-time. “Fraudsters are constantly evolving their methods, and traditional defenses often lag,” he said.

Adding to concerns about cybersecurity vulnerabilities, co-founder of Recital Finance, Bobola Ojo-Ami, warned that Africa’s banking sector relied heavily on digital infrastructure hosted outside the continent.

Speaking to The PUNCHfollowing a recent hacking attempt on Guaranty Trust Bank’s website, Ojo-Ami advocated for decentralization to strengthen cybersecurity defences.

“By dispersing critical infrastructure, decentralization makes it more difficult for hackers to exploit a single point of failure, thereby enhancing the overall resilience of banking systems,” he said.

The International Monetary Fund reported that global banks suffered a $2.5bn loss due to cyberattacks over the past four years.

The IMF’s April 2024 Global Financial Stability Report also revealed that $12bn had been lost over the past 20 years to cyber-related incidents.

The IMF advised that central banks and authorities should develop comprehensive national cybersecurity strategies, supported by effective regulation and supervisory capacity.

In response to the increasing fraud threats, some Nigerian banks are ramping up technology investments as part of their capital-raising efforts.

GTBank plans to invest N98.50bn (26.6 per cent of its capital raise proceeds) in technology upgrades, focusing on core banking applications, hardware infrastructure, and network architecture.

Access Holdings plans to allocate 20 per cent of its N343.09bn rights issue to network infrastructure and cybersecurity, with N68.62bn earmarked for those efforts.

Zenith Bank is similarly dedicating 20 per cent of its N99.27bn proceeds to technology, including N8.93bn for hardware and N2.98bn for cybersecurity.

Fidelity Bank is investing N19.01bn towards IT infrastructure, with N9.03bn focused on cybersecurity upgrades.