Stakeholders call for improved security in banks against fraudulent activities

... As banks lose N42.6bn to fraudsters

Stakeholders in the financial sector have called for more improved security in banks as fraudulent activities take the front burner.

Also, cyber security experts have underscored the need for banks to bridge the technology gaps to clamp down on internal threats after losing a whooping sum of N42.6bn to fraudulent activities between April and June 2024.

According to the report of the Financial Institutions Training Centre,  Q2 2024 Fraud and Forgeries Report, the figure surpassed the total fraud-related losses recorded by Nigerian banks throughout 2023.

Cyber security researcher, Madumere Chukwuka, from King’s College London, revealed that certain financial institutions were lagging behind when it comes to evolving cyber threats, leaving gaps for fraudsters.

He said that many fraud cases originated internally, with bank employees exploiting gaps in internal controls and auditing systems.

Chukwuka said, “Insider threats remain a significant issue. No matter how advanced the technology, human involvement in banking processes is often a weak link.

"Despite considerable investments in cyber security, banks were not fully integrating or utilising available tools. The technology exists, but it is underutilised. Overlapping roles and system inefficiencies further reduce the effectiveness of these tools.”

Co-founder of Recital Finance, Bobola Ojo-Ami, warned that Africa’s banking sector relied heavily on digital infrastructure hosted outside the continent.

Ojo-Ami advocated decentralisation to strengthen cyber security defences.

“By dispersing critical infrastructure, decentralisation makes it more difficult for hackers to exploit a single point of failure, thereby enhancing the overall resilience of banking systems,” he said.

The International Monetary Fund reported that global banks suffered a $2.5bn loss due to cyber attacks over the past four years.

The IMF’s April 2024 Global Financial Stability Report also revealed that $12bn had been lost over the past 20 years to cyber-related incidents.

The IMF advised that central banks and authorities should develop comprehensive national cybersecurity strategies, supported by effective regulation and supervisory capacity.

In response to the increasing fraud threats, some Nigerian banks are ramping up technology investments as part of their capital-raising efforts.

GTBank plans to invest N98.50bn (26.6 per cent of its capital raised proceeds) in technology upgrades, focusing on core banking applications, hardware infrastructure, and network architecture.

Access Holdings plans to allocate 20 per cent of its N343.09bn rights issue to network infrastructure and cybersecurity, with N68.62bn earmarked for those efforts.

Zenith Bank is similarly dedicating 20 per cent of its N99.27bn proceeds to technology, including N8.93bn for hardware and N2.98bn for cyber security.

Fidelity Bank is investing N19.01bn towards IT infrastructure, with N9.03bn focused on cyber security upgrades.