Wema Bank lost N550 million to fraudsters and thieves in 12 months despite spending N1.84 billion on technology and alternative channels.
The fraud losses were not just electronic, as come also occurred through burglary, according to the bank. Burglary is the the crime of illegally entering a building and stealing things, says the Cambridge Dictionary.
According to the Wema Bank’s half-year (H1) 2024 financial statement seen by Economy Post, the lender lost N293.639 million to fraud and burglary in the first six months of this year as against N256.387 million lost in the corresponding period of 2023. Hence the total amount lost to fraudsters in the first six months this year and the first six months last year was N550 million.
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Similarly, the bank spent N1.128 billion in H1 of 2024 as against N707.972 billion reported in the corresponding period of 2023. Hence the total amount spent by the bank on technology in the first six months of 2024 and the corresponding period of 2023 was N1.84 billion.
Litigations is also an issue
The bank is also facing some litigations arising from its operations. It had court case claims totalling N9.093 billion by June 2024.
“There are litigation claims against the Bank as at 30 June 2024 amounting to N9,093,421,840.46 (31 December 2023: N9,473,295,824.29). These litigations arose in the normal course of business and are being contested by the Bank,” the bank noted,
It argued that its directors, having sought advice of professional counsel, were of the opinion that no significant additional liability would crystallise from these claims other than as recognised in these financial statements.
Wema Bank’s technology vs fraud
In 2023 financial year, Wema Bank invested N1.422 billion in technology and other channels. However, the bank reported 1195 fraud cases, losing N685.595 million, according to the bank’s 2023 financial statement.
The lender incurred N8.067 billion in court cases as at September 2023 and also lost N239.920 million to fraud and burglary in nine months to September 2023
Fraud rising in Nigeria
Nigeria’s financial institutions such as banks lost N17.6 billion ($11.2 million) to fraud in 2023, according to the Nigeria Inter-Bank Settlement System’s (NIBSS)’s Annual Fraud Landscape report.
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The report disclosed that fraud had increased in Africa’s most populous nation every year in the past five years.
The total fraud losses rose from N2.96 billion in 2019 to N11.61 billion in 2022. Between 2019 and 2023, the total amount lost to fraud increased by 496 percent to ₦17.6 billion, Techpoint Africa reported.
A recent study by Surfshark, an Amsterdam-based cybersecurity firm, showed that Nigeria was the 32nd most breached nation in the first quarter of 2023.
The report noted that Nigeria recorded 82,000 leaked accounts between January and March 2023, representing a 64 percent jump from the result of the previous quarter.
A US Federal Bureau of Investigation (FBI) 2020 report had ranked Nigeria as the 16th nation most affected by internet crimes. The report said Nigeria received 443 complaints relating to internet crimes in 2020, The Cable reported.
Strengthen your IT systems, experts advise
Financial and IT experts have advised banks to improve their systems to beat fraudsters.
“To successfully combat fraud, banks must beat cybercriminals at their own game, which requires making advanced technology part of their first line of defense,” said Hitach Solutions, a global Microsoft integrator, while advising banks to use artificial intelligence, biometric authentication, multi-factor authentication, and advanced analystics.
READ ALSO: Wema Bank fined N61.4m after breaching 7 Nigerian laws
It also counselled banks to monitor transactions in real time, create database of known threats, educate banking customers, while hosting regular awareness training for the staff members.
A Lagos-based IT expert, Mr Tobe Iloani, stressed the need to develop several layers of IT security.
“There is a need for banks to use the multi-level approach. The use of AI is most critical now because fraudsters are innovating. Banks across the world use machine learning, and Nigerian banks can adopt this approach,” he said.
A former bank worker in Abuja, Ms Patience Gyan, said there was a need to change the staff in the IT departments regularly.
“Non-IT related frauds also happen. People steal others’ pin numbers or even smartly take their money while in the banking hall. So, this calls for vigilance among Nigerians. Do not believe every story you hear in the streets. Fraudsters are preying on people’s compassion and we should not give them that opportunity,” she added.
