Expert provides recipe for rising electronic banking fraud in Nigeria

CHIBUISI AMA-OHAKA [Abuja]|

As startling and revealing as the online fraud situation in Nigeria is, going by a recent Nigerian Deposit Insurance Corporation [NDIC] report, an Abuja based financial analyst, Mr Tope Fasua, has said that as a global phenomenon, Nigerians, including perhaps bankers themselves, may just have to live with frauds perpetrated via ATMs, electronic transfers, online payments, etc. and hope that scientific discoveries in information technology would provide solutions
According to the NDIC report, while the actual losses to the nation’s banking industry dropped by 24.29% from N3.17 billion in 2015 to N2.40 billion in 2016, the actual loss sustained in respect of internet banking fraud was N857 million, representing 27% of the total actual loss of the industry.
In his speech during a lecture: “The Role of NDIC in Mitigating Corruption in the Nigerian Banks” at the general meeting of the Abuja Chapter of the Alumni Association of the National Institute (AANI), managing director or NDIC, Alhaji Umaru Ibrahim stated that internet banking fraud in Nigeria is on the increase. He however said “the loss suffered by the industry due to electronic frauds declined significantly by 59.4% from previous year figure of N1.242 billion to N0.504 billion, representing 15.9% of total industry loss to frauds and forgeries.”
Fasua’s remarks on the internet banking fraud situation in Nigeria is coming on the heels of hopes by members of the public that the solution would come someday for the rising attempts by fraudsters and tricksters to hoodwink unsuspecting members of the public with GSM text messages, internet mails, facebook messages etc, and ATM manoeuvres, hoping to dupe them
He said that online fraud is a global phenomenon and that advanced countries like US, UK, France, Germany, Russia, are daily grappling with hackers and all manners of internet fraudsters. He said internet banking is a very fragile system, and whereas it eases the banking processes alongside many advantages, internet fraud is part of the strong challenges globally.
“Banks were quick to reduce the number of staff, having adjusted to the electronic banking system, and started enjoying huge profits; they soon realized that the number of people attempting to steal from the banks and from bank customers increased astronomically. Many of them are successful because of the calibre and experience of the persons perpetrating the crimes and the vulnerability of members of the public” he said
Although the NDIC report said that cases of frauds, forgeries and outright theft involving bank staff in Nigeria recorded a decline of 48.12% from N18.02 billion in 2015 to N8.68 billion in 2016, the fact remains that most fraud cases, especially those perpetrated electronically, have insiders as collaborators
Fasua, who is the chief executive officer of Global Analytics Consulting Limited, said many of the persons hacking into the systems of banks and the Automated Teller Machines are former bank [IT] staffs who were displaced as a result of the adoption of electronic banking systems, and those they have been able to train in the society he pointed out that unemployment has made most of the highly skilled, former IT staffs of banks to lead the horde of electronic banks fraudsters in Nigeria
“We must understand that currently, much of banking is taking place outside the banking halls, using gadgets and devices that are more or less outside the controls of the banks. Remember also that internet as a superstructure is neither owned nor domiciled in Nigeria. So it is a near hopeless situation for our country, and our banks,” he said
So what is the way out? Fasua said it must be understood that conventional banking, electronic banking and banking infrastructure were all borrowed from the West, so the solution to electronic banking fraud would naturally come from there. “We need to go and find out how they are overcoming it. With all the safeguards in the UK and US and other advanced economies, hackers are still being successful. But that does not mean that the banking authorities there are keeping quite or not doing something.
According to the financial expert, most of the perpetrators in Nigeria and minded Africa are youngsters whose social philosophy is twisted. “Whereas the case is different in other climes, there is this get-rich-quick feeling among our youths, and most of them are quite intelligent. They are being propelled by this queer social philosophy of getting rich while working little or not. We as society need to think of how to engage our youths appropriately.”
Fasua said banks should also be fair to their staff. According to him, most of the younger ones and mid tenure staff are poorly treated and remunerated. “Those people regarded as junior staff, including those in the IT sections, are the ones who really generate the funds, and provide the operational structure upon which the banks stand, and yet they are often paid poorly while the directors and senior managers earn so much. It affects the psyche of junior staff and it makes them vulnerable to fraudulent ideas,” he said
His remarks corroborated those of the NDIC boss, Alhaji Ibrahim who blamed much of bank fraud to insider participation. In Ibrahim’s opinion the bulk of the factors breeding corruption in Nigerian banks are “poor corporate governance, infractions in foreign exchange operations, cumbersome legal process and lack of effective sanctions of offenders, amongst others.”
He added that issues bordering on unethical financial practices and the resolution of conflicts between customers and their banks were being addressed by the Bankers Committee. The NDIC boss also noted the rising trend in the level of banks’ non-performing loans (NPLs) and stated that the NDIC had recommended the prohibition of Directors of licensed banks, including microfinance banks (MFBs) and primary mortgage banks (PMBs) from obtaining credit facilities from their respective banks.
He also informed that the NDIC is collaborating with other stakeholders such as the Economic and Financial Crimes Commission (EFCC), Police Special Fraud Unit (PSFU) and the Financial Malpractices Investigation Unit (FMIU) to conduct investigations into banking malpractices. He called for continued cooperation and collaboration between regulatory/supervisory authorities, the banks, the general public and the government in the fight against corruption in the banking industry.