Nigeria’s banking sector faces an escalating threat from cyber fraud, which is severely undermining public trust and the integrity of financial institutions. In 2023, the Nigeria Inter-Bank Settlement System (NIBSS) reported losses of N17.67 billion due to fraud, with over 50% of incidents occurring via digital platforms. As the country shifts towards a cashless economy, these figures highlight the growing risks associated with the rapid adoption of electronic payment systems, which have outpaced the security measures needed to protect them.
The rise in cyber fraud is largely attributed to vulnerabilities in both the banking system and the broader financial technology (fintech) ecosystem. While banks have embraced digital channels to drive financial inclusion, they have not kept pace with the necessary advancements in cybersecurity, leaving gaps that cybercriminals are quick to exploit. Internal fraud, often perpetrated by bank employees with access to sensitive systems, contributes significantly to the problem, accounting for up to 70% of all incidents. Meanwhile, phishing and social engineering tactics have led to thousands of cases, with customers tricked into revealing personal information such as one-time passwords (OTPs) and PINs.
The fintech sector, while accelerating financial inclusion, has also expanded the potential attack surface. Platforms that rely on third-party integrations and cloud infrastructure are vulnerable to ransomware attacks and exploits of remote desktop protocols (RDP). The broader economic challenges, including high unemployment and a cost-of-living crisis, have further compounded the situation. Underpaid and disgruntled employees are increasingly likely to collaborate with external fraudsters, exacerbating the threat.
In response to the growing crisis, the Nigerian government has initiated efforts to restore trust in the banking sector. The National Consumer Trust Framework, designed to deepen financial inclusion and protect consumers, is a critical step in this direction. This initiative aims to bring together regulatory bodies, financial institutions, and the judiciary to address the root causes of cyber fraud and bolster consumer protection.
For Nigeria’s banking sector to regain public trust and ensure its resilience, a multifaceted approach is required. Strengthened security frameworks, stricter regulations, and coordinated efforts between all stakeholders will be essential to curbing the rise of cyber fraud and securing the future of Nigeria’s financial system.
