Mounting cyber threats raises concerns for Nigeria’s financial institutions

By Onome Amuge

Technological advancements have significantly  improved banking operations, making the digital domain a very vital factor in productivity, growth and innovation. This has been buoyed by the rapid growth in customers’ appetite for internet banking,with banks expanding their delivery channels online, providing almost all offline banking services via the Internet

However, the growth of the information and communication technology environment is accompanied by serious threats, a major one being the proliferation of  cyber-attacks in the Nigerian banking system. The financial damages incurred by cyber-attacks are reported to be very high and rapidly increasing.

A recent report by the Financial Institutions Training Centre (FITC) found that Nigerian bank customers lost a total of N2.72 billion to cyber fraud in the first and second quarters of 2022.

Statistics by the Nigeria Inter-Bank Settlement System Plc also showed that between July and September 2020, banks lost N3.5 billion to digital fraud-related incidents, representing a 534 per cent increase from the same period in 2019, when it stood at N552 million.

Considering the report of cybercrime losses in recent times,Mike Obadan,a non-executive director of the Central Bank of Nigeria (CBN), stated that cybercrime is the bane of the banking industry in Nigeria.

Obadan,who expressed displeasure over the activities of cybercriminals,said it had continued to affect the growth of the banking sector and continued to elicit deep concerns, due to their negative impacts.

The professor of Economics pointed out that some Nigerian banks had been attacked by hackers, resulting in significant financial losses, while stressing that the rate, scale and complexity of the attacks were on the increase.

“It is of great concern that the activities of hackers have continued to affect the growth of the banking sector. The rate, scale and complexity of the attacks are on the increase considering the report of cybercrime losses in recent times,” he said.

According to Obadan, the CBN has continued to monitor and coordinate responses to cyber attacks on financial institutions in the country. He added that the heightened cyber security threats were moderated by CBN’s intensified surveillance and sharing of credible intelligence and remediation measures with the banks.

The economist also observed that hackers with the connivance of bank staff carried out some attacks. In light of this, he urged banks, including microfinance institutions, to continuously be on the alert and build capacity including the acquisition of necessary IT equipment to respond to cyber threats.

To effectively address the rising cyber threats, the Information Security Society of Africa –Nigeria (ISSAN), has called on banks and other financial institutions in the country to embark on deliberate efforts to train and retrain their employees to spot cybersecurity red flags.

The not-for-profit organisation dedicated to the protection of Nigeria’s cyberspace,said the development will help check and reduce the rising wave of cyber-attacks in the country.

Speaking at its monthly meeting recently,David Isiavwe, ISSAN’s president, advised organizations to enforce the use of approved connections and devices, stressing that clear protocols must be established with clients, and that they create necessary awareness and sensitize their suppliers as customers.

Isiavwe who is also a general Manager at Ecobank Nigeria encouraged banks and other organisations to be proactive in risk identification and mitigation. He further emphasised that artificial intelligence, machine learning and robotics should be adopted by financial institutions  to curb cyber-attacks.

“Sustainability and profitability of businesses, especially financial institutions, now depend heavily on how much these organisations can keep cyber thieves from exploiting their assets and information systems as well as the resilience of systems. We have seen how daring the cybercriminals could be, targeting data of organisations and individuals. Over the past few weeks, we saw different kinds of digital frauds as well as attempts by the bad guys to take advantage of unsuspecting victims. Early vulnerability remediation, continuous awareness, training and layered security remain key to strengthening every organisation’s security posture,” he stated.