Wema Bank, a Nigerian financial institution, faced significant financial setbacks due to incidents of fraud and forgery, which accounted for a loss of approximately 685 million Naira (equating to $594,943 USD) in the year 2023. The fraudulent activities were primarily executed through digital platforms and involved third-party payment and collection services.
In response to these events, Wema Bank is redoubling its efforts to mitigate such risks by enhancing its fraud detection and monitoring systems. It has increased the number of personnel within its digital compliance unit to tighten security measures. Concurrently, the bank has initiated an anti-fraud campaign with the objective of safeguarding its customers from similar fraudulent exploits in the future.
Noted as a tier-2 bank in the Nigerian banking hierarchy, Wema Bank has reported substantial consumer deposits totaling 1.8 trillion Naira (which is around 1.6 billion USD). In 2023, the bank’s digital channels generated a revenue of 745 million Naira, with electronic products alone contributing fees amounting to 7.3 billion Naira. Additionally, Wema Bank’s digital banking platform, ALAT, experienced a notable surge in users, amassing 2.1 million new sign-ups during the same year.
Wema Bank has asserted that its comprehensive efforts are yielding positive results as evidenced by a marked reduction in fraud cases within the first quarter of 2024, projecting an optimistic forecast that the extent of fraud and forgery in the fiscal year 2024 will decrease significantly in comparison to the previous year.
This report surfaces in the wake of Access Bank, another prominent Nigerian bank, disclosing their own financial losses due to fraud, which amounted to a staggering 6.15 billion Naira, depicting an increase from the 1.44 billion Naira reported in the preceding year.
Access Bank’s analysis indicates that the majority of these losses—about 80%—occurred through unauthorized transactions such as illicit transfers, withdrawals, and the reactivation of dormant accounts. Additionally, about 29% of the losses stemmed from embezzlement activities, encompassing cash theft, electronic fraud, and unauthorized use of USSD banking services.
A report highlighted that Nigerian banks collectively experienced significant losses totaling 5.79 billion Naira in the second quarter of 2023 due to fraudulent activities, a sharp increase from the 472.28 million Naira reported in the first quarter of the same year.
Seemingly complementing these concerns, Wema Bank also disclosed a 71% surge in their gross earnings, recording 226 billion Naira up from 133 billion Naira in 2022. They witnessed growth across multiple streams of revenue, including net interest income, account maintenance fees, foreign exchange transactions, and a robust return on customer loans due to the expansion of their loan portfolio.
Point-of-sale (PoS) fraud has also been a pressing issue within the Nigerian banking landscape, with the Financial Institutions Training Centre (FITC) reporting 1,994 incidents in the second quarter of 2023, amounting to a loss of 428 million Naira. Tackling this issue, the Nigerian Electronic Fraud Forum (NeFF) and the Association of Mobile Money and Banking Agents of Nigeria (AMMBAN) have been working in tandem to implement a feature designed to flag fraudulent transactions at PoS terminals across the country.
Furthermore, digital fraud is not only a challenge within Nigeria but has also been a concerning issue for other African nations. Tanzania’s central bank reported an 84% upsurge in digital fraud in the last quarter of 2023 relative to the previous year. In a similar vein, Absa Bank Kenya disclosed losses of 107.7 million Kenyan Shillings (equivalent to $716,566 USD) due to fraudulent activities in 2022.
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