NIBSS data shows Nigeria needs to get better at fighting fraud

Mar 08, 2022|Adesola Afolabi

"I've been scammed!" 
"Calm down"
Ani won ti gba me se! 
(translation: "I'm serious, I've just been defrauded").

This short conversation often leads to firefighting. You will hear it play out after someone has lost some money.

Some takeaways:
  • Data from the Nigeria Interbank Settlement System (NIBSS) show that fraud volumes and values are not going down. The volume of fraud successfully carried out has increased by almost 4x between 2019 and 2021. Also, fraud value increased from ₦5.04 billion recorded for the first nine months of 2020 to ₦7 billion in the same period of 2021—a 34% increase.

  • Several techniques, from card theft to PIN compromise, aid fraudsters in carrying out their acts. However, social engineering, which involves manipulating people to give out sensitive information, is the most common and arguably most dangerous technique. 

  • Artificial Intelligence is a potential solution, but it comes with challenges ranging from cost, limited resources, talent shortage and lack of systems. As a result, only 25% of the institutions surveyed by PwC are using artificial intelligence.

In some cases, there is no manipulation or deception involved. Innocent victims are sometimes hacked. However, what has become worrying is the increased growth rate of fraud cases in Nigeria, particularly financial fraud cases. This is a serious cause for alarm, especially because of the reputational damage it has on Nigeria's growing technology ecosystem.

You might consider your estate's small kiosk seller who cheats you or refuses to give you change as a form of fraud. But that's not the kind of fraud that worries Nigerians. Also, the Instagram vendors that you innocently paid money to who suddenly disappear won't fall into this analysis except you reported it to your bank.

However, forged bank alerts, money "magically" disappearing from your bank account, and other banking-related fraud cases that your bank has reported are included here. This is because most of the data for this story is from the Nigerian Interbank Settlement System (NIBSS), which was gathered from banks and financial institutions across the country. Also, the most recent available data was for the fourth quarter of 2021.

Still, we've curated NIBSS data from recent years submitted by affected institutions to the financial industry's anti-fraud

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