How Nigeria is staying a step ahead of fraudsters
One of the most critical steps in ensuring financial inclusion and the economic growth in Nigeria is deemed to be the importance of electronic banking and digitisation. This is outlined in both the National Financial Inclusion Strategy (NFIS) and Nigeria’s Cashless Economy projecthttps://www.cbn.gov.ng/cashless/.
Success in digitisation is a key step in curbing fraud and the cost of processing that makes banking in cash so risk heavy and costly.
Success, however, means that a high level of vigilance and constant efforts are needed to tackle, curb and eradicate what is not only a huge issue in Nigeria but indeed, the world at large. Nigeria, however, is taking proactive steps to ensure fraudsters don’t topple the country’s efforts.
As sophisticated as fraudsters across the globe are becoming, a fraudster is often only successful when their victim takes the bait. In most instances, it is not a clever hacking technique or system glitch that allows fraudsters to get way with stealing others’ money, but old school trickery.
This is only magnified when it is given a grand global stage through the use of technology to send out the bait in the form of false emails, false invoices and the like.
Financial literacy is key in this drive and forms a massive part of the NFIS.
Nigeria takes electronic fraud so seriously that the Central Bank of Nigeria (the CBN) has established a Nigeria Electronic Fraud Forum.
In the forward to the NEFF’s 2017 Annual report, the Deputy Governor of Operations at the CBN, Adebayo Adelabu, states that “this digital journey is plagued with land mines represented by electronic fraud would be stating the obvious, as the world over has shifted security policy stances to a more cyber- centric position. The warfare of banking security has changed from what was conventional to a constantly changing strategy in response to the rapid developments in payment technology”.
The key objectives of the forum are:
- Educating and informing all Banks and other stakeholders on various electronic fraud issues and trends (both locally and globally)
- Proactively sharing fraud data/information amongst banks and service providers, to enable prompt responses to prevent and/or limit fraud losses
- Formulating cohesive and effective fraud and risk management strategies, and defining key requirements as relates to e-payment security on behalf of the industry
Since its inception, major steps have been taken, mainly due to the forums’ collaborative approach to reducing electronic fraud. “Collaborations under NEFF have given rise to decisive outcomes that will steady the ship of our Payments System in Nigeria.
“Interventions in our Law Enforcement model has been made, attention of the Judiciary has been drawn to the need for more training of our judges on cybercrime, useful discussions have commenced with our telecom regulator in the face of an increased use of mobile platforms for payments (occasioned by the introduction of USSD), on more protective measures for users,” states the most recent Annual Report.
In addition, the forum has committed to the following practical steps:
- Consumer Education through an Industry Wide Awareness Programme under a model where the cost of awareness is partially but not entirely borne by stakeholders should be prosecuted. As this will bring greater efficiency and reach to bear on the education of consumers on contemporary fraud issues.
- That the Central Bank of Nigeria should increasingly monitor and control the risk posed to the National Payments System by Other Financial Institutions (OFIs) and extending Bank Verification Number (BVN) compliance to their customers.
- The Industry should take full advantage of the BVN for more effective fraud control.
- Advocacy for the early passage of the Payment System Management Bill should be further intensified.
- NeFF will collaborate with the National Information Technology Development Agency (NITDA) to implement a National policy document on cloud computing.
- NeFF to set up an Industry Committee on blockchain technology to monitor developments and make recommendations among others.
The use of technology
The use of biometrics has already been successful in Nigeria and is a further proposed key step to curbing identity theft, PIN theft, and many other types of fraud that could potentially result in theft.
An adaption of an Open Banking model in Nigeria will also allow banks to offer clients a layer of regulation and safety when Fintechs are engaging with their clients through APIs rather than independently.
A safe road ahead to economic growth
While there is no one dominant means with which to battle electronic fraud in Nigeria, the collaborative spirit, attention to and focus on its importance all points to a meaningful reduction in the threat of fraud.
Successfully reducing this threat would set a solid foundation for financial inclusion and economic growth.