With the scarcity of cash across the country, many bank customers have resorted to electronic transactions to pay for goods and services, a rising trend which analysts said could trigger an increase in fraud in the banking system.
In 2020, banking system fraud had spiked with many of it being from electronic transactions as the pandemic and resultant lockdown forced people to turn to electronic means of payment.
According to data from Nigeria Inter Bank Settlement System (NIBSS), attempted fraud value rose by 44 per cent in the third quarter of 2020 compared to Q3 2019, while actual loss value for Q3 2020 rose by 500 percent compared to Q3 2019.
In addressing the scarcity of cash in the system, the Central Bank of Nigeria had at the weekend admonished “members of the public to embrace and adopt other payment channels for their transactions.”
With more people who are not well educated in the dangers of electronic banking switching to it in an effort to find a way to pay and be paid for goods and services, analysts say more bank customers may be exposed fraudsters.
Speaking with NATIONAL ECONOMY, head of financial institutions ratings at Agusto&Co, Ayokunle Olubunmi, opined that there is a high probability that there would be a spike in the level of fraud over the next months if banks do not up their game in guarding customers and their funds from fraudsters.
He explained that as more people adopt electronic payments, “remember that a lot of people may not actually be well grounded about security. Also, do not forget that those fraudsters are always waiting for things like this and a lot of them will be saying this is the time to strike.
“So I wont be surprised if in the next one month, as we are seeing increase in the volume of transaction we are also seeing increase in the volume of fraud.”
The 2022 Consumer Digital Banking Satisfaction Index, a survey conducted by Agusto & Co, had showed that 59 per cent of bank customers who participated in the survey have been fraud victims on the digital platforms of their respective banks.
Many of the respondents who responded said they experienced more fraud perpetrated via phishing email and text messages. Data showed that 14 per cent of the respondents have been victims of fraud through phishing emails and text messages. Also, 11 per cent of respondents said they had become victims of fraud through data breach via downloaded applications such as free virtual private network (VPN), while another 11 per cent said they became victims through unauthorised access to bank account via USSD.
In the same manner, 10 per cent of the respondents said they had been defrauded though the unauthorised access to account due to wrong disclosure of their bank verification number, while nine per cent said they experienced fraud in the banking industry though unauthorised access to account due to disclosure of ATM card pin.
Considering these, the report had “suggests that more investments in cyber protection by banks is required to combat the growing exposure to cyber security risks on digital platforms.”
President of FinTech Association of Nigeria (FinTechNGR), Ade Bajomo, said to adequately address the rising rate of cyber-attacks, organisations should embrace collaboration and information sharing on cyber breaches.
According to him, keeping silence on the part of organisations that had been attacked would not help others, stressing that full disclosure, synergy and information sharing on reported cyber-attacks and how it was managed would guide other organisations to put preventive and counter measures in place. He called on organisations to constantly upgrade their technology to counter cyber-attacks, urging them to have data backup.
The co-founder/chief visionary officer of Digital Encode, Dr. Adewale Peter Obadare, also made case for collaboration amongst stakeholders, noting the need to strike a balance between the investments in people, technology, and processes to fight cyber-attack and fraud.
According to him, there is need to build cybersecurity intelligence quotient, which will comprise of Augmented Intelligence to check what is happening on the system real time, Anticipatory Intelligence to analyse what could happen, and Assistive Intelligence to determine what needs to be done. He recommended that digitisation, and digital transformation should be addressed.
On his part, Olubunmi recommended that banks start with what they can do internally. “A lot of these frauds have internal collaborators. So, what banks can do is to educate their staff on how to look out for those that are fraudulent, try and create a good work environment in terms of renumeration and educate their staff on the dangers of these fraud.
“Another thing that banks should do is to invest more in data protection and also ensure that the security of their data is a sacrosanct.
“The way things are going banks need to step up on security because with the cashless policy of the CBN there will be a significant rise in the volume of online transactions. The banks need to invest more on technology because these fraudsters are not resting on thier oars.
“These fraudsters vary from the small petty thieves that are looking for loopholes in the Nigerian banking system to those that are international and are trying to break into the system.
“Banks can also do more in educating their customers banks need to do more in this regard and not just using English but local languages to explain to people,” Olubunmi stated.
Information Security Society of Africa – Nigeria (ISSAN) president, Dr. David Isiavwe, noted that cyber attackers are getting more sophisticated globally, which is an aftermath of COVID-19 pandemic, stressing that greater awareness must be created to minimise attacks on businesses that may result in losses by various organisations.