Experts have said that the operations of commercial banks and their continuous existence may be severely affected if the worsening online fraudulent activities against financial institutions are not tackled.
They lamented that even though many commercial banks have increased their spending on technology, including cybersecurity, they still lose billions of naira to fraudsters, especially through their payment channels.
For instance, no fewer than six commercial banks have increased their spendings by 176.09 to N196.89 billion percent in the first half of 2024 compared to the same period in 2023 to prevent online fraud.
Notwithstanding this step, fraud within the banking halls surged by 589.01 percent during this period.
A recent Financial Institutions Training Centre (FITC) report revealed that banks suffered a total loss of N43.12 billion due to fraud in H1 2024, a jump from N6.26 billion recorded in H1 2023.
The report showed an 8,993.04 percent increase in fraud-related losses, from N468.49 million in Q1 2024 to N42.6 billion in Q2 2024.
In the period under review, FITC received 80 returns on fraud and forgery cases from 28 deposit money institutions.
Six banks including Access Holdings Plc, the parent company of Access Bank, Guaranty Trust Holding Company (GTCO), the owner of GTBank, Zenith Bank, Stanbic IBTC Holdings Plc, Wema Bank, and First City Monument Bank have increased their spendings on IT to the tune of N196billion.
While Access Bank led the way in IT and e-business expenses, spending N111.24 billion — a 265.13 percent increase from N30.47 billion in H1 2023, GTCO’s tech expenses rose 115.09 percent to N36.60 billion from N17.02 billion. Zenith Bank’s IT expenditure climbed 166.29 percent to N23.09 billion, compared to N8.67 billion the previous year. Stanbic IBTC’s expenses grew by 110.95 percent to N15.86 billion from N7.52 billion. FCMB increased its spending by 29.39 percent to N8.97 billion, and Wema Bank’s tech expenses rose by 59.41 percent to N1.13 billion.
Meanwhile, fraud cases continue to rise notwithstanding this huge expenditure.
Already, FITC has reported 23,004 fraud cases in H1 2024 alone.
It disclosed that the most prevalent types of fraud included computer/web fraud, mobile fraud, and POS-related fraud, following trends from 2023 and Q1 2024.
The analysis revealed a rise in fraud losses across all payment channels except for mobile fraud, which saw a decline.
Also, INTERPOL’s May 2024 report emphasised the growing threat of online fraud across Africa.
Expert firms such as FITC have said investment in technology alone would not address the menace as miscellaneous also account for major parts of the fraud.
An expert, Adedeji Olowe, founder and chief executive officer of Lendsqr, said that banks already have the tools to tackle fraud but that these tools are not being put to use.
Similarly, Pwapo of Resilience Technologies noted that overlapping roles within the banking sector create perfect conditions for some fraud types to thrive, adding that all these needed to be tackled to save financial institutions from further losses.