Nigeria’s rapidly expanding digital payment ecosystem processed more than 10 billion real-time financial transactions annually, but the country’s fraud protection capacity is struggling to match the pace of growth, leaving financial institutions increasingly exposed to sophisticated cyber threats.
A new industry report by Adhere,a compliance technology firm in partnership with TechCabal, revealed that while Nigeria’s digital financial infrastructure continues to scale, vulnerabilities around fraud prevention, cybersecurity capacity and regulatory compliance remain significant concerns.
The report, titled “The Compliance Reckoning: Regulating Financial Services in the Age of AI,” ranked Nigeria 110th out of 112 countries in fraud protection readiness, despite the country’s growing adoption of digital payments and real-time transaction platforms.
According to the report, the challenge is becoming more complex as cybercriminals increasingly deploy artificial intelligence and other advanced technologies to execute targeted attacks.
It noted that global financial fraud losses reached $442 billion in 2025, with AI-enhanced fraud methods becoming about 4.5 times more profitable than traditional fraud approaches.
In Nigeria, reported digital payment fraud losses declined by more than 50 percent to N25.85 billion in 2025 from N52.26 billion in 2024. However, the report cautioned that the decline does not necessarily reflect a reduction in underlying risks.
Instead, it noted that fraud losses have increased by about 350 per cent since 2020, even as the number of reported cases dropped by approximately 31 per cent, suggesting that criminals are moving towards fewer but more damaging attacks.
The report further identified Nigeria’s cybersecurity talent shortage as another major weakness, estimating that the country faces about a 90 per cent gap in cybersecurity workforce capacity.
Beyond technological challenges, financial institutions are also facing increasing regulatory expectations. The report noted that the Central Bank of Nigeria (CBN) issued 17 regulatory actions within 14 months covering areas such as cybersecurity, anti-money laundering and data protection.
It added that six compliance deadlines are expected between March 2026 and March 2028, placing additional pressure on banks and other financial service providers to strengthen their risk management frameworks.
The report referenced a N15.42 billion regulatory fine imposed on a leading commercial bank in 2025 as an indication that compliance failures could have broader consequences beyond financial penalties, including risks to international correspondent banking relationships.
Commenting on the findings, Gbemisola Osunrinde, group managing director of Smartcomply, said the decline in reported fraud figures should not be interpreted as evidence that the threat landscape has improved.
“The fall in reported fraud is welcome, but it is also a warning. When reporting drops faster than fraud, the risk does not leave the system, it leaves the record,” she said.
Osunrinde said financial institutions would need to move beyond deploying standalone artificial intelligence tools and instead build stronger compliance structures supported by proactive monitoring, customer risk intelligence, effective governance and collaboration across the financial ecosystem.
Similarly, Uche Henry, assistant inspector general of Police, described financial crime as an emerging national security challenge capable of affecting confidence in financial institutions and the broader economy.
He said criminals had shifted from traditional banking-related crimes to technology-driven attacks involving artificial intelligence, ransomware, deepfakes, SIM swap fraud, insider collaboration and social engineering.
Henry urged banks, telecommunications operators, regulators and law enforcement agencies to strengthen collaboration and adopt AI-powered solutions capable of detecting emerging threats.
He also raised concerns about insider risks within financial institutions and telecom companies, alleging that some employees assist cybercriminals by compromising banking and communication systems.
According to him, faster enforcement mechanisms, increased public awareness and wider adoption of advanced fraud detection technologies would be critical to securing Nigeria’s growing digital payment ecosystem.
“The institutions that come through the next eighteen months intact will not be the ones with the best AI tools, but the ones with the architecture around them, built on proactive detection, full customer risk context, model governance and collaboration across institutions,” the report stated.
