See How Nigerian Banks Were Drained Of N42.6bn— Your Hard-Earned Money At Risk

See How Nigerian Banks Were Drained Of N42.6bn— Your Hard-Earned Money At RiskCybersecurity experts have emphasized that Nigerian banks need to close significant gaps in technology adoption and closely monitor insider threats after reporting losses of N42.6 billion to fraud between April and June 2024.

The Financial Institutions Training Centre disclosed this loss in its Q2 2024 Fraud and Forgeries Report, highlighting that it exceeded the total amount lost to fraud by Nigerian banks throughout 2023.

Madumere Chukwuka, a cybersecurity researcher from King’s College London, told The PUNCH that some financial institutions have fallen behind in addressing evolving cyber threats, making them vulnerable to fraudsters. He noted that many fraud incidents stem from within, as bank employees exploit weaknesses in internal controls and auditing systems.

“Insider threats are a major concern. Regardless of technological advancements, human involvement in banking processes can often be a weak link,” he stated.

Despite significant investments in cybersecurity, Chukwuka pointed out that banks are not fully integrating or utilizing the tools at their disposal. “The technology is available but is not being used effectively. Overlapping responsibilities and inefficiencies within systems further diminish the effectiveness of these tools,” he explained.

He also mentioned that the sophistication of fraud schemes, such as manipulating settlement figures, complicates real-time detection for banks. “Fraudsters are continually adapting their tactics, while traditional defenses often lag behind,” he said.

Concerns over cybersecurity vulnerabilities have been heightened by Bobola Ojo-Ami, co-founder of Recital Finance, who warned that Africa’s banking sector relies heavily on digital infrastructure located outside the continent. Following a recent hacking attempt on Guaranty Trust Bank’s website, he suggested decentralizing infrastructure to enhance cybersecurity defenses.

“Decentralizing critical infrastructure makes it more difficult for hackers to exploit a single point of failure, thus improving the overall resilience of banking systems,” he argued.

The International Monetary Fund (IMF) reported that global banks incurred losses of $2.5 billion due to cyberattacks over the past four years. The IMF’s April 2024 Global Financial Stability Report revealed that cyber-related incidents have cost $12 billion over the last 20 years. The IMF recommended that central banks and authorities develop comprehensive national cybersecurity strategies, supported by robust regulations and supervisory capabilities.

In light of the increasing threats from fraud, several Nigerian banks are ramping up their investments in technology as part of their capital-raising strategies. GTBank plans to invest N98.50 billion (26.6 percent of its capital raise proceeds) in technology upgrades, focusing on core banking applications, hardware infrastructure, and network architecture. Access Holdings aims to allocate 20 percent of its N343.09 billion rights issue to network infrastructure and cybersecurity, designating N68.62 billion for these initiatives. Similarly, Zenith Bank is dedicating 20 percent of its N99.27 billion proceeds to technology investments, which includes N8.93 billion for hardware and N2.98 billion for cybersecurity. Fidelity Bank is investing N19.01 billion in IT infrastructure, with N9.03 billion specifically allocated for cybersecurity enhancements.