Septuagenarian Chidiebube Kalu walked into the Guarantee Trust Bank branch in Wuse 2, Abuja. The deposit slip danced on his shaky hands as he moved slowly to find someone to help him fill it.
He finally approached a teen and told him he wanted to transfer N7,000 ($4) to his daughter in the university.
Out of curiosity, the teenager asked why he couldn’t transfer the money from his account with his mobile phone, instead of coming to the bank.
His response was telling: “I’ll never use my phone for banking again. They wiped out all my money once, and the bank couldn’t trace it.” So for deposits and withdrawals, he believed visiting the bank for financial transactions is safe.
Chidiebube’s experience is not an isolated incident. Eniola Okeowo, another victim of cyber fraud, is now wary of keeping large sums in her account. Two years ago, she received an SMS with some of her bank and personal details, which she believed were from her bank. After sharing more information, she started receiving debit alerts and lost over N250,000. Eniola had fallen prey to a type of cybercrime known as “phishing.”
And there are the market women who would tell their customers they only accept cash, no matter the amount of the commodity. They say they do not want to hear “stories that touch” from mobile transfers.
The Rise of Cyber Fraud in Nigeria
There is a growing trend of cyber fraud in Nigeria with many Nigerians falling victim and losing money.
The fraudsters often target the bank details of people, by posing as bank agents, or exploiting cracks in data storage and sharing by the account owners.
For instance, fake bank pages litter social media platforms with the managers disguising themselves as customer care representatives. They demand sensitive account details from unsuspecting individuals who share their complaints online.
A fake UBA account on X responding to a user’s message
According to recent data from the Financial Institutions Training Centre (FITC), reported fraud cases by banks have surged in recent times, with increasing amounts involved. FITC reported that Nigerian bank customers lost a total of N472 million to fraudsters in the first quarter of 2023.
In 2023, 80,658 unique customers in Nigeria were victims of fraud, according to the Nigeria Inter-Bank Settlement System Plc (NIBSS), and according to a Digital Payment survey by Kaspersky (www.Kaspersky.co.za), 37% of users in Nigeria lost money from an incident involving digital payments in 2022 and 2023.
Eroding Trust in the Banking System
The consequences of cyber fraud are far-reaching. While some Nigerians have decided to delete bank apps from their phones, others choose to avoid the bank entirely.
The growing mistrust in Nigeria’s digital banking system poses a significant threat to the country’s financial inclusion goals. As people become increasingly wary of using formal banking channels, they are resorting to informal, cash-based systems. This not only undermines efforts to increase financial inclusion but also perpetuates a culture of cash-based transactions.
Data from the Central Bank of Nigeria shows that currency outside banks surged to N4.02 trillion in September 2024, up from N2.42 trillion in September 2023.
The CBN’s financial inclusion strategy aims to ensure that at least 80% of Nigerian adults have access to formal financial services by 2025. However, experts say the rising incidence of cyber fraud and the resultant loss of confidence in the banking system may hinder progress towards achieving this target.
Financial expert Opeyemi Agbaje attributes this trend to the erosion of confidence in the banking industry. “People are keeping cash outside the banking system due to lack of trust and availability of cash,” he noted.
SOLUTIONS
In response to the growing threat, the Central Bank of Nigeria (CBN) has directed all financial institutions to establish fraud desks to combat electronic fraud. The CBN has also set up the National Economic and Financial Crimes Forum (NEFF), a collaborative group aimed at reducing fraud in the Nigerian financial system.
Stakeholders in the financial industry emphasize that while bank customers need to be more vigilant with their ATM cards and banking details, financial institutions must also work to regain the public’s trust.
Dr. Chizor Malize, Managing Director and CEO of FITC, in a media interview, said the rising incidence of bank fraud is eroding confidence in the banking sector. To combat this, Malize recommends that financial institutions adopt Artificial Intelligence to counter cyber threats and digital risks, which have intensified due to technological advancements.
“There is an urgent need for leveraging AI to mitigate risks and bolster the stability of the financial system,” she said.
Also, some banks are employing social media campaigns to create awareness about the existence of fake handles impersonating them on social media and warn their customers against falling victim.