The Nigerian banking sector witnessed a staggering rise in fraudulent activities in the second quarter (Q2) of 2024, amounting to a total loss of N42.6 billion between April and June.
This was disclosed by the Financial Institutions Training Centre (FITC) in its recently released Q2 2024 Fraud and Forgeries report. The loss recorded in Q2 2024 alone eclipsed the total amount lost to fraud throughout 2023, where Nigerian banks collectively lost N9.4 billion.
A breakdown of the figures revealed a significant escalation in fraud-related losses quarter-on-quarter, with a staggering 8,993% increase compared to the N468.4 million lost in Q1 2024. Compared to the N5.7 billion loss in Q2 2023, this year’s Q2 figures represent a 637% increase.
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Major Fraud Types And Channels
According to FITC, miscellaneous and other types of fraud accounted for the largest share of the losses, making up 96.46% of the total amount lost in Q2. This category alone accounted for N41.14 billion. Other significant losses were attributed to fraudulent withdrawals, which cost banks N781.2 million, and computer/web fraud, amounted to N400.7 million in losses.
The total amount involved in fraud cases during Q2 2024 saw a dramatic 1,784% increase, surging from N2.9 billion in Q1 to an astonishing N56.3 billion by Q2. Fraudulent activities were perpetrated through various channels, including ATMs, online platforms such as web and mobile banking, bank branches, and point-of-sale (POS) terminals.
Interestingly, despite the overall rise in fraud, card-related fraud experienced a decline of 47.66%, with cases dropping from 21,469 in Q1 to 11,237 in Q2. In contrast, fraudulent activity involving cheques and cash increased by 36.67% and 9.09%, respectively, with cheques surging from 30 cases in Q1 to 41 cases in Q2, while the use of cash rose from 209 in the first quarter of 2024 to 228 in the second quarter of 2024.
Cash-related fraud also saw a modest rise of 9.09%, increasing to 228 cases in the second quarter of 2024. A more detailed analysis revealed that fraud losses through bank branches saw an astronomical increase of 31,497%, surging from N133.9 million in Q1 to N42.2 billion in Q2. Computer and web-based fraud also experienced a massive jump, with losses growing 1,560%, from N24 million in Q1 to N400.8 million in Q2.
Despite the overall trend of increasing fraud, mobile fraud recorded a decline. The amount lost via mobile channels decreased by 59%, falling from N216.4 million in Q1 to N88.7 million in Q2 2024. However, the FITC report did not provide specific data regarding losses due to ATM-related fraud. The surge in fraud across Nigerian banking platforms poses significant challenges for financial institutions, regulators, and consumers alike.
As fraud becomes more sophisticated and widespread, the FITC proposed that deposit money institutions can utilize AI-driven tools that flag unusual entries or patterns to implement continuous and automated monitoring systems that can detect anomalies or discrepancies in settlement files. Additionally, regular unannounced internal audits focusing specifically on settlement processes can be conducted to identify and address any irregularities promptly.
