Nigerian banks experienced a significant reduction in financial fraud losses in the first quarter (Q1) of 2024, with a 77.62% decrease compared to the previous quarter.
This was revealed by the Financial Institutions Training Centre (FITC) in its Q1 2024 report on Fraud and Forgeries in Nigerian banks. According to the report, Nigerian banks lost N468.42 million in Q1, down from N2.09 billion in Q4 2023. The total amount involved in fraud during the quarter was N2.99 billion, a 56.73% decline from the N6.91 billion recorded in the previous quarter.
Additionally, the FITC report highlighted a reduction in the number of reported fraud cases. In Q1 2024, there were 11,472 cases, compared to 12,405 cases in Q4 2023, marking a 7.52% decrease. The report identified computer/web fraud, mobile fraud, and PoS-related fraud as the most prevalent forms of fraudulent activity, consistent with trends observed in the previous quarter.
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Part of the report reads,
“For Q1 2024, a total of eleven thousand, four hundred and seventy-two (11,472) cases were reported, and when compared to the twelve thousand, four hundred and five (12,405) cases reported in the Q4 2023, a 7.52 percent decrease. During Q1 2024, fraudulent activities were conducted through various channels, which included ATMs, online platforms such as web and mobile banking, bank branches, and point-of-sale (PoS) terminals.
“In the first quarter of 2024, cards were the only instrument for fraud that recorded an increase, while the use of cheques and cash recorded relatively lower fraudulent activities when compared to the previous quarter. Specifically, there was a 31.12% rise in fraud cases through the PoS channel, rising from 2,683 cases in Q4 2023 to 3,518 cases in Q1 2024. Similarly, the number of fraud cases through the Mobile Channel increased by 0.45% rising from 3173 cases in Q4 2023 to 3393 cases in Q1 2024”.
In the review of Q1 2024, an analysis of the ranking of fraud categories revealed that Mobile fraud had the highest ranking, accounting for N768.84 million (25.73%) of the total amount. It was followed by Computer/Web fraud at N680.75 million (22.78%). PoS fraud came next at N565.69 million (18.93%).
According to the report, staff involvement in fraud declined by 12.96%, decreasing from 54 cases in Q4 2023 to 47 cases in Q1 2024. However, 35 staff appointments were terminated in Q1 2024, and this is vastly significantly higher from Q4 2023 when we saw staff termination of 9 cases.
In a bid to ensure that fraud cases are reduced in banks, the FITC cited a rise in emerging technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Robotics Process Automation (RPA), amongst others, that can be used to identify fraud patterns.
It noted that these technologies can help the staff of financial institutions to be ahead of fraudsters, thereby reducing the occurrences of fraud in their financial institutions. However, it emphasized that in adopting these emerging technologies, financial institutions must align with regulatory standards, to adopt transparent decision-making processes and ethical considerations.