Approximately N17.67 billion was lost to fraud in Nigeria’s banking industry in 2023, marking a staggering increase of 496.96 per cent compared to the losses recorded in 2019. This brings the total amount lost to fraud over the past five years to N59.33 billion.
Data compiled by SBM Intelligence reveals a consistent rise in the value lost to fraud over the years. Despite this increase in financial losses, the number of fraud cases, which peaked in 2021, has started to decline.
The number of fraud incidents rose by 112.74 per cent when compared to 2019. In 2023, there were 95,620 reported cases, significantly higher than the 44,947 cases in 2019 but 22.84 per cent lower than the 123,918 cases recorded in 2021.
The surge in banking industry fraud in 2021 coincided with a peak in social engineering scams, which followed the 2020 global lockdown and the subsequent return to normalcy. The number of fraud incidents decreased to 101,669 in 2022 and further declined in 2023.
Despite the reduction in fraud cases, financial losses have consistently risen over the past five years. In 2019, the industry lost only N2.96 billion. This figure soared by 292.23 per cent to N11.61 billion in 2020.
Losses continued to climb to N12.77 billion in 2021, N14.32 billion in 2022 and reached N17.67 billion in 2023. Of the 2023 losses, N9.38 billion was attributed to social engineering fraud, up from N8.025 billion in 2022.
Social engineering involves fraudsters tricking individuals into revealing personal data that can be used to access their bank accounts.
Additionally, website and server hacking of financial institutions resulted in losses of N2.44 billion in 2023, a sharp increase from the N6.2 million lost through this channel in 2022. Increased cash usage led to robbery-related losses soaring from N437.4 million in 2022 to N1.61 billion in 2023.
Losses from fraud through PIN compromise rose to N1.30 billion in 2023, up from N852.3 million the previous year. Conversely, losses due to internal collusion decreased from N1.52 billion to N1.03 billion in 2023.
The value lost to fake assistance skyrocketed from N133 million in 2022 to N1.01 billion in 2023, while losses from phishing doubled from N240.6 million in 2022 to N551.2 million last year.
Furthermore, inadequate two-factor authentication resulted in a loss of N192.3 million, an increase from N137.8 million in 2022. Losses due to SMShing (fraudulent SMS messages) rose to N30.7 million in 2023, compared to N1.01 million the previous year.
SBM Intelligence noted that while fraud is a common issue in the global financial sector, it is particularly rampant in Nigeria. “Although the number of incidences has reduced from a 2021 high, the amount of money lost to fraud has increased significantly. This may indicate that the perpetrators have gotten better at their act and figured out ways to move larger sums of money undetected.”
