New data has revealed that Nigerian bank customers lost significant amounts of money through social engineering, website/server hacking, and robbery in the year 2023. The Fraud in Nigeria’s Banking Sector (2019-2023) report by the Nigerian inter-bank settlement scheme, analyzed by SBM intelligence, found that bank customers in Nigeria were defrauded through various channels, with social engineering causing the highest losses amounting to N9.37 billion. Website/server hacking and robbery followed, with losses of N2.43 billion and N1.6 billion respectively.
The report also highlighted other channels through which customers were defrauded, including Pin Compromise, Internal Collusion, Phone Theft, SMShing, Vishing, Fake Assistance, Missing/lost card, Phishing, Lack of 2Factor Authentication, Card Theft, and Others. Overall, fraud losses have increased by 496.96 percent over the past five years in Nigeria, fueled by the rise of electronic payments.
Electronic transactions have increased significantly, with losses amounting to N59.33 billion between 2019 and 2023. The report noted a surge in mobile transfers and subscriptions, with fraudsters targeting individuals aged 40 and above through vulnerabilities in mobile banking. Despite a decrease in the number of reported fraud incidents, losses incurred by victims have risen.
Financial institutions submit fraud data to NIBSS, with a compliance rate of 37 percent in 2023. Deposit money banks accounted for 92 percent of fraud cases, while mobile channels were the most vulnerable to fraudsters. Social engineering remained the dominant technique used by fraud actors, with the mobile channel being the most profitable for fraudsters.
The NIBSS emphasized the importance of fraud education, particularly for the vulnerable demographic, and urged the financial industry to enhance security measures and collaborate to address the challenges posed by fraud. The report highlighted the need for thorough examination, modification, and reinforcement of regulations to reduce fraud potential and improve chances of successful recuperation.
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