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Nigerian Banks Score Big Win Against Financial Fraud: Losses Plummet 77% in Q1 2024

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Nigerian banks are breathing a sigh of relief after a recent report revealed a dramatic decline in financial fraud losses. The Financial Institutions Training Centre (FITC) released its “Report on Fraud and Forgeries Report in Nigerian Banks for Q1 2024,” highlighting a 77.62% drop in losses compared to the prior quarter.

This positive development comes after a period of concern for the Nigerian banking sector. In Q4 2023, banks reported losses exceeding N2.09 billion due to fraudulent activity. However, the latest figures paint a much rosier picture, with total losses for Q1 2024 amounting to just N468.42 million.

Reduced Fraud Incidents and Amounts

The encouraging news extends beyond overall losses. The FITC report also indicates a decrease in the number of reported fraud cases. Q1 2024 saw 11,472 cases, a 7.52% decline compared to the 12,405 cases recorded in Q4 2023. This suggests that banks are not only experiencing fewer successful fraudulent attempts but also identifying and reporting suspicious activity more effectively.

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The report further delves into the types of fraud most prevalent during the period. Consistent with the previous quarter, computer/web fraud, mobile fraud, and POS-related fraud remained the top three threats. However, the extent of these fraudulent activities has also shrunk significantly.

Mobile Fraud Still a Top Threat, But Losses Decline

Mobile banking continues to be a prime target for fraudsters, accounting for 46.29% of total losses in Q1 2024, with a value of N216.83 million. Despite this, it represents a notable decrease compared to the previous quarter.

POS Fraud on the Rise, But Overall Losses Drop

The report also highlights a 31.12% increase in fraud cases perpetrated through Point-of-Sale (POS) terminals. This rise, from 2,683 cases in Q4 2023 to 3,518 cases in Q1 2024, suggests a potential shift in tactics by fraudsters. However, it’s important to note that the overall losses associated with POS fraud remain lower compared to other methods.

Other Fraud Methods Persist

Computer/web fraud remains a significant concern, accounting for 17.00% of total losses in Q1 2024, with a value of N79.61 million. Additionally, the report notes a 31.12% increase in fraud cases perpetrated through Point-of-Sale (POS) terminals, rising from 2,683 cases in Q4 2023 to 3,518 cases in Q1 2024. These findings emphasize the evolving nature of financial fraud and the need for multi-pronged approaches to address these threats.

Read Also: Standing Lending Facility: Banks Borrowing from CBN Hits Record High

A Call for Continued Vigilance

While celebrating the significant progress made, the FITC urges banks not to become complacent. The report emphasizes the need for continued vigilance and enhanced fraud control activities.

“The banks would need to be more vigilant and also understudy their fraud control activities in this quarter and improve upon the same to ensure that going forward the numbers keep dropping,” the FITC stated.

Advanced Technologies Offer a Powerful Weapon

The report underscores the importance of embracing advanced technologies to combat fraud. Specifically, the FITC identifies Artificial Intelligence (AI), Machine Learning (ML), Robotics Process Automation (RPA), Advanced Analytics, and Predictive Modelling as crucial tools for proactively detecting and preventing fraudulent activity.

If You Ask Me

The decrease in financial fraud losses reported by Nigerian banks in Q1 2024 is a promising sign. However, it’s crucial to recognize that the fight against financial crime is ongoing. By leveraging advanced technologies, strengthening internal controls, and fostering a culture of security awareness, Nigerian banks can build on these positive developments and create a more secure financial environment for their customers.

By implementing these technologies and remaining vigilant, Nigerian banks can build upon the momentum gained in Q1 2024 and create a more secure financial landscape for their customers.

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