The Financial Institutions Training Centre in the first six months of this year has showed that at least 105 bankers were involved in fraudulent activities in an analysis of the reports on “Fraud and Forgeries in Nigerian Banks.’’
This analysis showed a 34.38 per cent decrease from the 160 staff-implicated cases in the same period last year.
Despite the drop in staff involvement, the total amount linked to these fraud cases surged by 380.13 per cent, rising from N12.33bn between January and June 2023 to N59.2bn in the same period this year. The high rate of fraud among bank employees occurred despite an increase in the wage and salary expenses of some banks in the country amidst high inflation. The total loss resulting from these fraudulent activities also increased significantly, reaching N43.07bn in H1 2024, compared to N6.26bn in H1 2023, representing an increase of 588.02 per cent. About 72.75 per cent of the total amount involved in fraud was lost this year. The increase in the number of cases in which bank staff lost their jobs due to fraud likely led to a general reduction in the cases involving bank employees.
The number of bank staff terminations due to fraud increased, with 84 staff dismissed in H1 2024, a rise of 223.08 per cent from the 26 terminations recorded in H1 2023. This likely means that about 80 per cent of cases involving bank staff led to termination of employment in the first six months of this year. Meanwhile, outsider involvement in fraud cases saw a slight decline, falling by 10.78 per cent, with 21,335 cases reported in H1 2024, down from 23,912 in the same period of 2023.
Our sources gathered that outsiders were involved in 92.74 per cent of bank fraud cases between January and June 2024. It was further observed that fraudulent activities in the Nigerian banking sector remained prevalent through various channels – web-based fraud, ATM fraud, and fraud involving bank branches.
In H1 2024, fraud via bank branches led by a significant margin, involving a total of N55.01bn, representing the largest channel of fraud losses. This was an increase of 646.4% from N7.37bn lost to fraud at bank branches in the same period of last year.
Web-based fraud followed, with N1.87bn. The ATM-related fraud was up to N43.1m in the period under review.
Among the banks, Access Holdings recorded the highest wage bill of N151.5bn, representing a 145 per cent rise from N61.9bn in H1 2023
First Bank followed closely with N134.2bn in personnel expenses, marking a 110 per cent year-on-year increase from N63.9bn in the same period last year.
UBA saw its wage bill grow by 92 per cent to N126.6bn in H1 2024, compared to N65.9bn in H1 2023.
This sharp rise in wage and salary expenses across the banking sector highlights the increased cost pressures faced by these institutions as they expand their operations. However, despite this increase, fraud among employees persists as the rising costs of living continue to bite hard.
A recommendation by FITC in its report on bank fraud is the need to enhance staff training and awareness. It emphasised that “the improvement of staff training and awareness is paramount. Intensifying fraud prevention training for all bank employees, with a focus on the latest fraud tactics and key warning signs, especially in rapidly growing areas like card-related and web-based fraud should be a top priority.”
The FITC also emphasised the need for Nigerian banks to enhance their fraud detection systems by leveraging advanced technologies such as Artificial Intelligence and Machine Learning.
FITC also highlighted the importance of regular audits and continuous monitoring of banking operations, particularly in high-risk areas such as settlement processes. Banks are encouraged to conduct unannounced internal audits to detect potential anomalies and improve staff training on fraud prevention.
ICT expert and Senior Partner of e86 Limited, Olugbenga Odeyemi, noted that several fraud cases needed insiders in banks.
He said, “Some of the hacking and fraud cases that we’ve seen, happened not because of the lack of security on the banks’ electronic platforms, but because of poverty, greed, and sometimes the lack of education on the part of the customers.
“Other than asking banks to invest more in the security of their platforms, it’s equally important that banks spend more resources on educating their customers.
“That said, several fraud cases couldn’t have happened without the help of insiders in some of the banks. I think Nigerian banks should spend more money on the welfare of their staff while making appropriate changes to their internal processes, starting from their hiring processes.”
