E-Financial
Banks’ Customers Lose N51Bn to Fraud- Report
Recent reports have surfaced, revealing Nigerian banking customers’ staggering loss of N51 billion in savings due to fraudulent activities, according to Leadership findings
The findings also exposed a concerning trend, with cybercriminals now setting their sights on defrauding Fintech bank customers nationwide.
According to the report, from 2019 to July 2023, Nigerian banking customers fell victim to substantial losses, tallying up to N50.5 billion attributed to various forms of banking-related fraud.
The surge in financial deceit gained momentum, especially after the cash crunch resulting from the naira redesign and the implementation of cash withdrawal limits by the Central Bank of Nigeria (CBN).
As of July 2023, the recorded losses to fraud have surpassed N9 billion, sparking concerns that the figure could soar to over N20 billion by year-end.
Cybercriminals have intensified their efforts, targeting customers utilizing Fintech banks and exploiting perceived weaknesses in these platforms’ security protocols.
Fintech banks, initially conceived as streamlined payment platforms, have been misunderstood by certain segments of users, including market traders, artisans, and entrepreneurs.
This misinterpretation has resulted in numerous individuals falling prey to fraudulent activities, facing considerable challenges in recovering lost funds due to the absence of physical offices for these platforms.
Perpetrators often exploit Point of Sale (PoS) machines or trading platforms to execute illicit fund withdrawals, complicating restitution efforts.
Among the affected Fintech banks are prominent names like OPay, Palmpay, and Moniepoint. Instances have emerged where customers grappled with the arduous task of reclaiming vanished funds, intensifying apprehensions about the safety and security of digital platforms.
Despite concerns, certain users maintain steadfast confidence in Fintech platforms, praising their seamless services and reliability.
A store owner, Mr. Seyi, said he used all the POS terminals that are available because “if I want to do a transaction and there is a network problem, I can use another one. I have been using POS for the past two years. I save my money on it because if I withdraw the money today, for instance, and I want to use it for business the following day, I will still have to put money on it, so I just leave it there, and I have not recorded any fraudulent activities.”
Another POS user said she uses Microsystem POS.
“I can tell you I prefer its network to other fintech POS or deposit bank POS because of the problem they create for us. We leave our money there and this is because we use it for business,” he said.
Adamu Sanusi was, however, cautious of fintechs, saying, “I do not use all these payment apps. How can I leave the deposit money banks and start using a fintech bank? If I have an issue with them, how can I locate them? My friends use them and encounter challenges. I do not want to stress myself; hence, I stick with the bank. I know I can quickly enter their office and complain if there is an issue.”
Industry experts underscore the imperative for Fintech companies to enforce stringent Know Your Customer protocols, institute proactive fraud detection mechanisms, and conduct extensive customer education on account security.
Suggestions include the integration of biometric verifications such as fingerprint and facial recognition, along with rigorous transaction monitoring to identify and address suspicious activities promptly.
Titan Trust Bank has selected Oracle FSS for its core and digital banking technology, it is understood.
The start-up bank recently obtained its license by the Central Bank of Nigeria (CBN).
It’s understood that Temenos and Infosys also competed for the deal.
The shortlist came down to the two most widely installed international core systems in Nigeria, Infosys’ Finacle and Oracle FSS’s Flexcube.
The Nigerian banking sector has seen a great deal of upheaval over the years, with many mergers, start-ups and closures. Flexcube is a well respected name since the late 1990s (the pioneer was Access Bank, now one of the country’s top five banks) and has been a commonly selected platform since then.
The new bank is believed to be one of five to have gained regulatory approval of late (Globus Bank is another).
Local media sources say the new licences stem from the Central Bank’s desire to attract new investments into the sector and better serve the country’s 50 million+ unbanked and under-banked citizens.
Titan Bank is said to be headed by a former executive director of Heritage Bank (which is a Finacle user).
Oracle FSS did not respond to request for comment.
International Monetary Fund (IMF), has appointed Tony Elumelu, Nigerian billionaire and group chairman of Heirs Holdings, owners of United Bank of Africa, to its advisory council on entrepreneurship and growth, convened by Kristalina Georgieva, the fund managing director.
The announcement was disclosed in a statement on Friday.
According to the statement, the IMF advisory council comprises global business leaders, policymakers, and academics dedicated to identifying and addressing regulatory barriers to entrepreneurship.
The IMF said Elumelu will be instrumental in ensuring that Africa’s entrepreneurship is central in policy making.
“Elumelu, Africa’s leading advocate of entrepreneurship and whose Foundation has funded, mentored, and trained over 25,000 African entrepreneurs since 2015, champions entrepreneurship as the engine for the economic transformation of Africa,” the statement reads.
“A self-made entrepreneur, Elumelu’s embracing of entrepreneurship is fundamental to his concept of Africapitalism, his belief that Africa’s private sector can and must play a leading role in the continent’s development, making long-term investments that deliver social and economic value.
“Elumelu will be instrumental in ensuring that Africa’s entrepreneurial potential is central to global economic policy making.”
Speaking at the inaugural meeting of the advisory council on March 26, Georgieva said the appointees would share their experiences on how macroeconomic and financial policies “can provide a supportive environment for innovation, entrepreneurship, and productivity — key ingredients for a thriving private sector and strong economic growth”.
Africa’s Micro, Small, and Medium Enterprises, fintech industry, scaling remittances, and cross-border payments will be the driving forces behind the continent’s digital ballooning payments system, which is estimated to reach $1.5 trillion by 2030.
This is according to a MasterCard-commissioned study by Genesis Analytics, which states that the digital payments economy is growing faster on the continent.
This comes as the World Bank says Sub-Saharan Africa has shown significant growth in financial inclusion over the past decade, much of it driven by mobile money account adoption.
Dimitrios Dosis, president, Eastern Europe, Middle East and Africa at MasterCard, comments: “Africa is filled with immense possibilities, and its people have the potential to shape the global economy in the decades ahead.
“MasterCard remains deeply committed to driving digital transformation across the continent, working closely with entrepreneurs, merchants, banks, start-ups, telcos, and governments. By increasing our investments, expanding innovation, and fostering inclusion, we are helping build a more connected and accessible digital future.”
The payment technology company went on to say as a longstanding technology partner to Africa, its continues to strengthen its commitment to the continent’s digital growth through strategic investments, public-private partnerships, and innovation initiatives that drive financial health and economic growth.
In addition, it says trends in Africa signal a strong shift towards digital transactions, with businesses and consumers increasingly embracing contactless solutions, further accelerating economic participation and financial accessibility across the region.
“For over five decades, MasterCard has worked alongside African governments, businesses, and communities to advance financial inclusion and economic development.
“With Africa projected to host nine of the world’s 20 fastest-growing economies, we are focused on leveraging our expertise and a technology to support the continent’s continued digital transformation.
“Our investments today will help build a more resilient economy for the future,” says Mark Elliott, division president, Africa, MasterCard
By fostering collaboration with key stakeholders, MasterCard says it aims to enhance digital connectivity, expand economic opportunities, and enable millions of people and businesses to thrive in the digital economy.
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