Three major commercial banks in Nigeria, Access Bank, GTBank, and Wema Bank lost a cumulative N7 billion to fraudulent activities in the 2023 financial year through various channels.
Nairametrics learns that the frauds were committed through mobile banking, internet fraud, USSD, and fraudulent transfers/withdrawals among others. Aside from the internet-enabled frauds, one of the banks also lost money through armed robbery in the period under review.
According to the 2023 audited financial reports released by the banks, the criminal elements were not successful in all cases of fraud attempts on the financial institutions. Cumulatively for the three banks, the amount involved in frauds last year was N12.5 billion.
Losing N7 billion means that the banks were able to block or recover over N5 billion from fraudsters in the year under review.
Access Bank’s big loss
Specifically, Access Bank accounted for the lion's share of the N7 billion as it reported a N6.1 billion loss out of N8.6 billion involved in fraud on its platform. This represents 87% of the total loss by the three banks that have so far made their fraud and forgeries report public.
- The bank reported a total of 6,634 cases of fraud involving N8.6 billion out of which 6.1 billion was lost.
- The report also indicated that electronic/USSD frauds were the most frequent, accounting for 99% of all cases at 6,597. However, the biggest loss for the bank was recorded through fraudulent transfer/withdrawal, which accounted for 98% of the total loss at N6 billion.
- The bank reported that it also lost N21.5 million through armed robbery in the period under review.
- Access Bank’s 2023 loss to frauds and forgeries represents a staggering 327% increase compared with N1.4 billion recorded by the bank in 2022.
Wema Bank lost N685.6 million
In its audited financial report for 2023, Wema Bank recorded losses totaling N685.6 million across different channels. According to the bank, frauds were attempted on N1.1 billion, out of which N685.6 million was lost.
While the bank recorded some losses through internet fraud and mobile banking, the largest chunk of the amount was lost through what it described as ‘Operations and others’. According to the bank, N595 million, representing 87% of the total loss for the year, was lost through this channel.
Wema further disclosed that 97% of the frauds were perpetrated by external fraudsters, while only 3% involved internal people.
GTBank lost 198.8 million
The banking arm of Guaranty Trust Holding Company, GTBank also reported losses to frauds and forgeries. The bank recorded a total of 16,965 cases of fraud involving N2.7 billion.
These resulted in a loss of N198.8 million for the bank. The loss represents 7% of the total amount involved in fraud in the period under review.
Compared with 2022, GTBank saw a decline in loss to frauds and forgeries last year. According to the bank’s report, it lost N2.5 billion to fraudulent activities in 2022.
Frauds in the banking sector
While three other banks, Stanbic IBTC, Zenith Bank, and UBA, have also released their audited financial results for 2023 as of the time of filing this report, their reports did not capture the fraud and forgery data. However, the latest banking fraud and forgery report by FITC revealed that all the banks have been losing money to online and offline frauds.
According to the report, in Q2 2023 alone, Nigerian banks lost N5.79 billion to fraud activities. While the FITC data captured both electronics and non-electronics frauds in the banks for Q2 2023 alone, the Nigeria Inter-Bank Settlement System (NIBSS) also disclosed that the banks had lost N9.5 billion to e-frauds alone between January and August 2023.
Against the backdrop of the the rising cases of fraud in Nigerian banks, the FITC has urged the banks should strengthen their security protocols and systems to prevent unauthorized access to customer accounts and sensitive information. According to the organization, this may involve incorporating measures such as multi-factor authentication, implementing strong encryption techniques, and ensuring regular security updates are in place.
"Also, banks should utilize advanced fraud detection systems and technologies that can analyse patterns, identify anomalies, and detect suspicious activities in real-time.
"These systems which employ Artificial intelligence (AI) and Machine Learning (ML) can help identify potential fraud incidents and trigger alerts for further investigation.
"It is also important to perform regular audits of internal systems, processes, and controls to identify any vulnerabilities or weaknesses that could be exploited by fraudsters and bank staff,” FITC advised.
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