Nigerian banks must enhance cybersecurity investments amidst rising fraud losses

Nigerian banks must improve cybersecurity investments after losing N42.6bn to fraud in Q2 2024, emphasising the need to address insider threats.

[dropcap]N[/dropcap]igerian banks are urged to improve cybersecurity measures after losing N42.6bn to fraud in Q2 2024. Experts stress the need to address insider threats and technology gaps.

Cybersecurity experts warn that Nigerian banks must urgently enhance their cybersecurity investments after suffering N42.6bn in fraud losses between April and June 2024.

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This staggering figure, revealed in the Q2 2024 Fraud and Forgeries Report by the Financial Institutions Training Centre, surpasses the total fraud losses recorded throughout 2023.

Madumere Chukwuka, a cybersecurity researcher at King’s College London, highlighted that many banks are failing to keep pace with evolving cyber threats.

He noted that insider threats remain a critical issue, with employees often exploiting vulnerabilities in internal controls and auditing systems.

“Human involvement in banking processes is a weak link,” Chukwuka said, emphasising that despite significant investments in cybersecurity, many banks underuti

lise existing tools.

He pointed out that overlapping roles and inefficiencies hinder the effectiveness of these resources.

The complexity of modern fraud schemes poses additional challenges. Fraudsters increasingly use sophisticated tactics, such as inserting fictitious amounts into settlements, making real-time detection difficult. Chukwuka noted that traditional defences often lag behind evolving fraud methods.

Bobola Ojo-Ami, co-founder of Recital Finance, raised concerns about the reliance of Africa’s banking sector on digital infrastructure hosted outside the continent.

Following a recent hacking attempt on Guaranty Trust Bank’s website, he advocated for decentralisation to bolster cybersecurity.

Decentralising critical infrastructure could mitigate risks by eliminating single points of failure, thereby enhancing resilience against cyberattacks, Ojo-Ami argued.

The International Monetary Fund (IMF) reported that global banks lost $2.5bn to cyberattacks over the past four years. The IMF’s April 2024 Global Financial Stability Report also revealed $12bn lost to cyber-related incidents over the past two decades.

In response to increasing fraud threats, some Nigerian banks are ramping up technology investments. GTBank plans to invest N98.50bn, or 26.6% of its capital raise proceeds, in technology upgrades, focusing on core banking applications and network infrastructure.

Access Holdings aims to allocate 20% of its N343.09bn rights issue to cybersecurity, earmarking N68.62bn for those efforts. Similarly, Zenith Bank will dedicate 20% of its N99.27bn proceeds to technology, while Fidelity Bank is investing N19.01bn towards IT infrastructure and cybersecurity upgrades.

Quadri Olaitan

Quadri Olaitan is a journalist and contributor to Freelanews.com, covering news, public affairs, and human-interest stories.