Thursday, July 9, 2020

Electronic banking fraud in Nigeria: how it’s done, and what can be done to stop it

By IMTFI Fellow Oludayo Tade, University of Ibadan, in The Conversation

Stefan Heunis/AFP via Getty Images

Six years ago, a cashless policy became fully operational in Nigeria. The aim was to encourage electronic transactions with a view to reducing the amount of physical cash in the economy. The logic was that this would minimise the risk of cash-related crimes.

But a major downside of the policy has been pervasive electronic banking fraud (e-fraud). Although the cashless banking system was designed to foster transparency, curb corruption and drive financial inclusion, it’s threatened by the growing perpetration of fraud.

About N15.5 billion was lost to bank fraud in 2018. About 60% of the fraud was perpetrated online owing to available internet-based and tech-rated banking services.

Our research investigated dimensions of electronic fraud in Nigeria. We found three: internal fraud carried out by banking staff; external fraud carried out by ordinary Nigerians; and collaboration between fraudsters and banking staff.

We found that inefficient supervision, non-performance of oversight by regional heads of banks, and poor follow-up on customers’ addresses (Know Your Customer) accounted for the fraud that took place.

Our study provides the banking industry, banking public and investors with critical pointers on how to reduce fraud.

Read more about the different types of fraud and recommendations in the full post here:

Access research publication: "Dimensions of Electronic Fraud and Governance of Trust in Nigeria’s Cashless Ecosystem" by Oludayo Tade and Oluwatosin Adeniyi in the International Journal of Offender Therapy and Comparative Criminology (IJO).

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