Cybercriminals Loot N51bn from Nigerians in Fintech Fraud

Nigerian banking customers have reportedly lost approximately N51 billion ($126 million) to fraud, with cybercriminals specifically targeting fintech bank users. According to data from the Nigeria Inter Bank Settlement System (NIBSS), between 2019 and July 2023, customers lost N50.5 billion to banking-related fraud. It is forecasted that this figure could rise to about N20 billion by the end of 2023.

The security measures of fintech banking platforms which are primarily payment platforms are said to be porous, allowing unauthorized access to customers’ accounts. Traditional banking clients have apparently mistaken these platforms for deposit money banks, therefore moving large sums of money into the fintech platforms and suffering losses due to the fraud.

  • Nigerian consumers have allegedly lost nearly N51 billion to fraud involving fintech banking platforms.
  • Security vulnerabilities in fintech banking platforms are blamed for the high incident of fraud.

The vulnerability arises from the fact that fintech banks are essentially payment platforms, but many untrained users perceive them as deposit banks, therefore putting larger sums into them and thus suffering losses when breaches occur. Fintech platforms affected by this issue include OPay, Palmpay, and Moniepoint.

There are also reports stating that it’s usually challenging to reclaim the money lost to these fraudulent activities, especially because they frequently use Point of Sale (PoS) machines or trading platforms for the fraudulent withdrawals, and the lack of physical offices makes it harder to recover such funds.

Fintech companies operating in Nigeria have been advised to deploy blockchain technology to curb the rampant cases of fraud. Blockchain technology provides a mechanism that, by allowing transparent information sharing within a business network, can significantly prevent fraud since it requires verification from all parties involved in any transaction. Additionally, fintech platforms have been urged to develop systems that would anticipate potential fraud cases even before they occur.

Similarly, it was suggested that fintech platforms should have dedicated fraud departments to monitor transactions and flag any suspicious activities. These measures, coupled with robust implementation of the Know Your Customer (KYC) policy, could significantly reduce the incidents of fraud on these platforms.