A recent report by the Financial Institutions Training Centre (FITC) has revealed that Nigerian bank customers suffered losses exceeding ₦1 billion due to fraud executed through bank branches and mobile channels during the second quarter of 2022. Although the overall volume and monetary value of fraud in the banking sector showed a notable decline compared to the first quarter, the dramatic rise in in-branch and mobile-related fraud calls for urgent industry reforms.
According to FITC’s Fraud and Forgeries Report for Q2 2022, a total of 67,878 fraud cases were recorded between April and June 2022 across Nigerian financial institutions. The data reflects a mixed trend—while fraud through some digital channels decreased, mobile and bank branch fraud rose alarmingly.
Total Fraud Cases Decline, But Specific Channels Show Dangerous Uptick
The report highlighted a 40.05% reduction in the total value of funds involved in fraud cases, dropping from ₦14.65 billion in Q1 2022 to ₦8.78 billion in Q2 2022. This decline is attributed to improved surveillance, better fraud detection systems, and more proactive security policies across Nigerian banks.
However, the decline in total fraud figures masks an unsettling reality. The amount of money lost via fraud through certain key channels—particularly mobile and branch operations—rose significantly in the second quarter. This shift indicates that fraudsters are increasingly targeting transaction modes where security vulnerabilities may be easier to exploit.
Breakdown of Losses Across Channels
FITC’s detailed analysis revealed the following developments across banking channels:
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Web Channel: Losses dropped drastically from ₦1.07 billion in Q1 to ₦98.4 million in Q2. This marks a significant improvement and may be attributed to stronger cybersecurity practices and increased customer awareness of phishing and online scams.
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ATM Channel: A sharp decline was also observed in ATM-related fraud, with losses plummeting from ₦43 million to just ₦5.9 million. This may reflect enhanced physical security around ATM operations and improved encryption of ATM transactions.
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Bank Branch Fraud: Alarmingly, fraud losses through physical bank branches skyrocketed from ₦103.45 million in Q1 to ₦618.24 million in Q2—a staggering increase of 497.56%. This spike may point to internal collusion, process loopholes, or insufficient oversight at physical locations.
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Mobile Banking Channel: Losses via mobile channels also jumped considerably, rising from ₦270.92 million to ₦449.03 million, a 65.74% increase. Given the rapid adoption of mobile banking across Nigeria, this figure underscores the growing vulnerabilities in digital financial ecosystems.
Causes and Trends Behind the Rise in Branch and Mobile Fraud
Experts attribute the rise in mobile and branch-based fraud to several factors:
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Internal Collusion: Some cases may involve bank employees who exploit access to sensitive customer data or transaction platforms.
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Weak Identity Verification: Poor Know Your Customer (KYC) procedures at branches and for mobile onboarding can make it easier for fraudsters to impersonate real account holders or create fake accounts.
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Increased Mobile Usage: With millions of Nigerians adopting mobile banking amid the cashless economy drive, cybercriminals have found more entry points to exploit unsuspecting users, especially those unfamiliar with security best practices.
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Outdated In-Branch Protocols: Some branches may lack real-time fraud detection tools or updated security protocols, making them easy targets for coordinated scams and unauthorized withdrawals.
Call to Action: Strengthen Internal Controls and Fraud Prevention
In light of these findings, FITC emphasized the urgent need for banks to overhaul their internal security systems. The organization advised financial institutions to:
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Implement robust internal control frameworks that monitor employee activities and restrict access to sensitive systems.
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Improve real-time monitoring of transactions across all platforms, especially mobile and branch operations.
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Invest in customer education, raising awareness about common fraud tactics and the importance of protecting personal banking credentials.
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Use artificial intelligence and data analytics to detect suspicious activity patterns and flag potential fraud attempts before they escalate.
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Conduct regular security audits and penetration testing to identify and fix system loopholes.
FITC warned that without proactive steps, rising fraud losses could erode public trust in the banking system and threaten the progress made in digital financial inclusion.
Implications for the Banking Sector and Customers
As Nigerian banks continue to digitize and expand access to financial services, fraud risks will evolve alongside new technologies. While gains have been made in securing digital platforms like web and ATM channels, mobile apps and in-branch services now present significant weak points.
Customers are advised to remain vigilant, report suspicious activity promptly, and follow best practices such as using strong passwords, enabling two-factor authentication, and avoiding unsolicited links or downloads. Meanwhile, banks must ensure that the security layers protecting customer funds are consistently updated and rigorously enforced.
Conclusion: A Balancing Act Between Innovation and Security
Nigeria’s banking sector stands at a critical juncture. On one hand, it continues to embrace technological advancements to bring financial services closer to the people. On the other, it faces the mounting challenge of securing these services against increasingly sophisticated fraudsters.
The latest FITC report reveals both the progress and the pitfalls of this journey. While the overall decline in fraud volume is encouraging, the explosive rise in mobile and in-branch fraud losses serves as a wake-up call. Unless decisive action is taken, the sector risks undermining customer confidence and stalling its push toward a fully digital and secure banking environment.
