Alarming data has emerged on the escalating levels of fraud within Nigeria’s deposit money banks, as the second quarter of 2023 bears witness to a 276.98% surge in financial losses amounting to N9.75 billion.
This disconcerting revelation has prompted concerns over the robustness of the banking sector’s risk management practices and accountability measures.
The recently released report by the Financial Institutions Training Centre (FITC), which delves into Fraud and Forgeries in Nigerian banks for Q2’23, sheds light on a disturbing trend.
The surge in fraud-related incidents also coincided with a significant 6.96% drop in reported cases, from 12,553 in Q1’23 to 11,679 in Q2’23.
The report highlights that fraudulent loans were the most significant contributor to these losses, accounting for an astounding 94.35% of the total loss, equating to N5.46 billion. In contrast, mobile fraud accounted for 3.39% of the total loss, totaling N196 million.
Instances of computer and internet fraud remained minimal, representing only 1% of the losses, with a recorded amount of N59.5 million.
An alarming revelation was the substantial increase in insider involvement, which soared within the period under review.
This trend is highlighted by a staggering 22.2% rise in staff participation in fraudulent activities, while outsider involvement experienced a drop of 6.4%.
The report disclosed that the losses were sustained by 24 banks that submitted returns on fraud cases.
This data is indicative of a worrying trend that demands immediate attention from both banking institutions and regulatory bodies.
The Association of Senior Staff of Banks, Insurance Institutions, and Financial Institutions (ASSBIFI) expressed concern over the upward trajectory of staff involvement in fraud cases.
They attributed this phenomenon to the casualization of workers and the prevalence of non-pensionable employment practices within the sector.
Experts in the financial industry stressed the urgency of reinforcing internal control mechanisms, embracing technologies like Artificial Intelligence (AI), remunerating staff adequately, and adopting strong information technology systems.
These measures are crucial for protecting the sector’s integrity, investor trust, and the financial health of banks.
The FITC’s report serves as a wake-up call for the financial industry, urging swift and comprehensive actions to curb the rise of fraudulent activities that threaten the stability and reputation of Nigerian banks.
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