Nigerian banks lose N159bn to e-fraud

Nigerian banks are facing tough times in the cashless economy as they have lost a total of N159 billion to electronic fraud between 2000 and first quarter of 2013. This was disclosed by the Executive Director, Business Development, Nigerian Inter-bank Settlements Systems, NIBSS Plc, Mrs. Christabel Onyejekwe in an exclusive chat with National Mirror in Lagos.

Onyejekwe, who quoted recent research data on e-fraud in Nigeria by the Financial Institutions Training Centre, FITC, said the staggering figure is a deterrent to improving the consumer confidence and adoption of Nigeria’s cashless strategies, stressing increased efforts must be mounted to checkmate the menace.

Analysing the annual e-fraud trend in the banking industry since 2000 till date, Onyejekwe, the figure stood at N1.65 billion in 2000; N3.12 billion in 2001; N8.20 billion in 2002, but declined to N5.13 billion in 2003 while in 2004, the figure moved up to N89.43 billion.

Also, in 2005 and 2006, the efraud declined to N6.76 billion and N2.74 billion losses to the banks while in 2007, the figure spiraled to N8.51 billion. The year 2008, according to her, marked a watershed in the trend of e-fraud, as Nigerian banks recorded the highest losses to the tune of N34.50 billion.

The successful switch from magnetic stripe the of Automated Teller Machines, ATM, cards in 2009 to a more secure Chip and PIN cards led to a drastic reduction in e-fraud to the tune of N21.72 billion with a further decline to N14.96 billion in 2010.

In 2011, Onyejekwe said the figure increased again to N24.43 billion; and declined again to N10.06 billion at the end of 2012 while, in first quarter of 2013 alone, cases of bank e-frauds were valued at N7.5 billion.

She said: “All these figures listed from 2000 till the first quarter of this year amount to approximately N159 billion losses in the system. She, however, projected that for this year, if recorded fraud at the end of first quarter is N7.5 billion, “extrapolated expected fraud at the end of the year would be N7.5 billion multiplied by four and this will be N30 billion.

But something has to be done to reduce this trend.” She explained that the fraud cases come in various types, which include card not present, card skimming, physical attacks on ATM machines, card trapping and others.

According to her, in the past three years, 62 per cent have experiences cases of card not present fraud type; 48 per cent have experienced card skimming fraud; 33 per cent have witnessed physical attacks on their ATM machines; 10 per cent have recorded card trapping while not less than 20 per cent of the banks have recorded other forms of e-fraud on their systems.

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