The Central Bank of Nigeria’s (CBN) plan to establish an electronic fraud risk information centre in collaboration with commercial banks in the country is a welcome development that should be fast-tracked. The centre, when established, will check rising cases of e-fraud in the banking sector that had resulted to the loss of N203 billion between 2000 and 2014;
The steering committee of the centre fashioned after that of South Africa, had got useful insights that will help check e-fraud in the nation’s banking system to the barest minimum.
This innovation has indeed come at the right time considering the increasing growth of e-payment transactions in Nigeria and the disturbing tide of e-frauds recorded in recent times.
It is also worrisome that e-fraudsters have become sophisticated and sometimes beat all processes and controls put in place to safeguard customers’ accounts and financial data of the banks.
According to security assessment of Nigerian banks, e-fraudsters had in recent years invaded Nigeria’s banking platforms at will, deploying over 185 fake mobile applications on the websites of no fewer than 15 commercial banks in the country and in the process, extracted customers’ personal and financial information with intent to defraud billions of naira from their accounts.
The assessment report also revealed that Automated Teller Machine (ATM) had the most fraudulent transactions, while Internet banking fraud loss was put at N3.2bn every year. Besides money, other losses to the financial industry include brand erosion, fraudulent email channel and lack of email visibility.
Statistics from the CBN show that banks are at present under cyber defacement attacks from e-fraudsters.
For instance, in 2013, e-fraud cases were 855, with the banks losing N19.149bn.
Undoubtedly, this development poses a big threat to the stability of the industry. We, therefore, believe that a risk information centre will boost public confidence in the banking sector.
The solutions should include effective monitoring tools that will keep track of fraudsters. There is also the need for the centre to have the mechanism to dictate insider abuse as some of the frauds may be aided by bank employees.
In addition to the proposed risk information centre, there is need for the banks to strengthen their internal control mechanisms for checking frauds. These should include the authentication for internal banking processes as well as certification and review of operations of instant payment system.
In this era of globalisation, it is important that the banks constantly update their softwares such that they would not be vulnerable to fraudsters. They should comply with the CBN’s Standards and Guidelines, especially those that deal with the operations of ATM by installing anti-skimming devices as well as embrace the latest version of the Payment Card Industry Data Security Standards (PCIDSS).
We commend the CBN and the commercial banks for working together on this innovation to stem e-fraud. We believe that if the innovation is well managed, it will give the banking industry the cutting edge that will boost public confidence in its operations and services. It could be one of the solutions that the Nigerian banking system has long been waiting for.
But getting the right designs, hardware and trained professionals is imperative. The professionals should be well motivated so that they would carry out their duties efficiently. Before the centre becomes operational, we suggest that relevant laws be put in place to guard against lapses that could work against the objectives of the scheme.
Considering the vital roles of the banking industry in the economy and the high incidence of e-fraud in the country, the risk information centre is a technology-driven innovation that is highly needed.
