In the latest report released by the Financial Institutions Training Centre (FITC), it revealed that the volume of fraud cases in Nigerian banks reduced by 79.44 percent in the first quarter (Q1) of 2023, compared to the previous quarter.
For the review of the frauds and forgeries cases in the first quarter of 2023, a total of 12,553 cases were reported, as against 14,609 recorded in the previous quarter, showing a 14.07 percent decrease.
The numbers in Q1 2023 reveal that of all the fraud activities recorded, mobile fraud, computer/web fraud, and POS-related fraud were the top three frauds with the highest number of occurrences.
Tekedia Mini-MBA edition 16 (Feb 10 – May 3, 2025) opens registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
For the first quarter report, Mobile fraud has the highest ranking, which accounts for N1.1 billion (42.72 percent), followed by the Computer/Web fraud category at N646 million (24.99 percent). This was followed by POS fraud at N450 million (17.41 percent) and fraudulent withdrawals at N139 million (5.36 percent).
Data from the total amount lost to frauds in the first quarter of 2023 reveal that mobile fraud accounts for 34,07 percent at N161 million followed by Computer/web fraud accounting for 27,69 percent at N130 million and Fraudulent withdrawals representing 24.72 percent at N116 million.
For Q1 2023 under review, fraud activities were performed using a range of channels, including ATMs, Web, and Mobile Banking Platforms (including the USSD & e-Naira channel), Bank branches, and POS (Point of Sale) terminals. With regards to fraud instruments in Q1 2023, the highest instruments used for fraud were cash and card, while there was a low frequency of usage of cheques in the fraud activities.
The ATM channel recorded a 38,61 percent decrease from 404 cases in Q4 2022 to 248 cases in Q1 2023. Similarly, Mobile and Web channels recorded a 9,78 percent and 17,81 percent decrease in the number of cases respectively. On the other hand, POS fraud increased by 19,51 percent in Q1 2023 bringing the figures to 1985 cases from 1661 cases in the previous quarter.
The amount involved in mobile fraud increased by 17,85 percent from N938 million to N1.1 billion while the POS fraud amount involved increased from N241 million to N450 million representing an 86.73 percent increase.
On the other hand, there was a decrease in the amount involved in Computer/web, ATM, and bank branch frauds with Computer/web fraud recording a significant decrease of 96.90 percent from N10,6 billion to N646 million.
There was also a decrease across the board in the number of cases for all instruments of transactions. Cash fraud decreased by 7,28 percent to 140 from 151 cases. Card fraud decreased from 11,566 cases to 9,817 cases (15.12 percent). In like manner, cheque frauds decreased by 60,87 percent from 29 cases to 9 cases.
An analysis of the amount lost through the various instruments of fraud in the first quarter of 2023 reveals that there was a significant decrease of 90.21 percent in the amount lost through card fraud from N3.03 billion in Q4 2022, to N296 million in Q1 2023. Also, there was an increase of 35,89 percent was noted for cash fraud from N120 million in the previous quarter to N163 million in 01 2023.
However, despite the significant decrease in the number of fraud cases recorded in the first quarter of 2023, the prevailing incidents of fraudulent activities remain a significant factor.
In the report, the FITC stated that Nigerian banks must establish robust internal control systems that can effectively detect and prevent fraudulent activities. Such systems can help to safeguard the interests of both the banks and their customers and promote trust in the banking sector.
These systems also include implementing adequate segregation of duties, regularly reviewing and reconciling transactions, and limiting access to sensitive data.
Banks are admonished to invest in modern fraud detection technologies that can identify and flag suspicious transactions and patterns, such as machine learning algorithms and artificial intelligence (AI) tools.
Also, in Nigeria, several bank customers are not attuned to security issues around digital transactions, and even well-educated people run the risk of falling victim to bank fraud. Therefore, it is expedient for banks to educate customers on various tactics employed by fraudsters to avoid them falling victim.