Rising E-Fraud: Balancing security and convenience in Nigeria’s digital banking

Madam Amaka, a petty trader, has sworn never to use electronic banking channels for fear of being defrauded. Similarly, Shina, a secondary school teacher, chooses to endure the inconvenience of visiting bank branches rather than risk falling victim to cybercriminals.

Their fears are not unfounded. Over the past year, electronic fraud (e-fraud) incidents in Nigeria have surged, with alarming cases such as the N44 billion fraud and the hacking of over 1,000 accounts in two of the country’s top-tier banks, often referred to as the FUGAZ banks.

Additionally, a fintech company recently reported a staggering N21.2 billion loss due to a so-called ‘technical glitch.’

As Nigeria’s digital banking sector continues to expand, so do the threats associated with it.

With point-of-sale (POS) transactions reaching N18 trillion and total electronic transactions hitting an all-time high of N1.08 quadrillion in 2024, fraud attempts are expected to rise. The question remains: is electronic banking a curse?

The reality is that all innovations come with risks. Just as water is essential for life yet capable of causing drowning, and airplanes offer convenience despite occasional crashes, digital banking provides immense benefits that should not be overlooked due to fraud concerns. Instead, ongoing improvements in security and awareness must be prioritized to mitigate risks.

Understanding E-Fraud in Nigeria

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E-fraud in Nigeria targets both financial institutions and individuals, utilizing increasingly sophisticated methods. The Nigeria Inter-Bank Settlement System (NIBSS) reported that total fraud losses recorded by Nigerian banks in 2024 stood at N52.26 billion, a significant increase from N11.61 billion in 2023. This sharp rise in fraud cases, which stemmed primarily from electronic transactions, underscores the need for stronger preventive measures.

Fraud against individuals often succeeds due to user negligence or lack of awareness.

Cybercriminals frequently employ social engineering tactics such as scam calls, deceptive messages, malware, and fake websites to trick users into revealing their security credentials. On the institutional side, insider collusion is a major enabler of large-scale fraud. In most major fraud cases, at least one employee exploits internal system vulnerabilities.

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Transaction authorization methods in Nigeria typically rely on a combination of security measures such as PINs, passwords, passcodes, tokens, one-time passwords (OTPs), biometric authentication (fingerprint, facial recognition, iris scan), and behavioral pattern recognition. Despite these measures, fraudsters succeed when users unknowingly grant them access to their accounts.

According to the Check Point Software Technologies Global Threat Index, Nigeria ranked 11th globally for malware attacks in January 2025, highlighting its vulnerability to cyber threats. Financial institutions must continuously upgrade their security infrastructure to combat this growing challenge.

Staying Safe in the Digital Banking Era

While electronic banking offers convenience and efficiency, users must adopt safe practices to protect themselves from fraud. Here are some key steps to ensure security:

Choose a reputable financial institution with strong regulatory oversight and a track record of integrity.

Use banking channels that align with your security needs and lifestyle.

Enable two-factor authentication (2FA) for high-value transactions, unless using biometric authentication.

Never disclose security credentials such as PINs, passwords, or OTPs to anyone, regardless of trust levels.

Memorize security credentials instead of writing them down.

Be cautious of unsolicited requests for sensitive details. Banks will never ask for PINs or passwords.

Report lost or stolen devices immediately and request a temporary account freeze while investigating.

Avoid using public Wi-Fi and charging ports when accessing financial applications.

Enhancing Stakeholder Collaboration to Combat E-Fraud

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Beyond individual responsibility, financial institutions, regulators, and technology providers must work together to strengthen the security framework of Nigeria’s digital finance ecosystem.