Online gambling in Nigeria poses huge financial risks, as banks report N9.5 billion loss in 2023

• Nigerian banks witnessed a staggering N9.5 billion in losses in 2023, with a 54% increase in July alone. 
• Cashless policies by the CBN contribute to a surge in e-fraud due to increased transaction volumes, raising concerns about financial sector stability. 
• Betting platforms, wallet accounts, and point-of-sale agents are identified as major channels for e-fraud; experts call for heightened authentication and education to combat cybercriminals.

According to the Nigeria Inter-Bank Settlement System (NIBSS), banks there have already lost roughly N9.5 billion in 2023. Premier Owoih, the managing director of NIBSS, said this at the third-quarter meeting of the Nigeria Electronic Fraud Forum (NeFF), which was held in Lagos.

The MD, represented by Temidayo Adekanye, the NIBSS Chief Risk Officer, raised concerns about the alarming rise in electronic fraud in the country's financial sector, particularly in the online gaming business. He pointed out that the CBN's cashless strategy is in part to blame for the rise in banking sector e-fraud.

“Recently, we had the cashless policies from CBN, which was incurring a dramatic increase in the volume of transactions in the industry which variably was the impact of the volume of fraud in the industry itself,” the Chief Risk Officer relayed.

“The increased efficiency has also meant that fraud has dramatically increased across the industry. For Q1 2023, the total fraud reported through the industry forum portal was at N5.1 billion,” he added.

The MD went on to underline how critical the issue has grown to the stability of the financial industry by comparing data on e-fraud from prior years to 2023.

In the MD’s words, “For fraud trends over the last five years, in 2019, we’re looking at about N3 billion and currently 2023, we are looking at about N9.5 billion to date. Fraud losses have increased dramatically over the last five years.

“So, as you can see also from the current perspective, from January to July 2023, there has been a slight jump between June and July, a 39 percent increase with 8,649 with the actual fraud losses in July 2023, we’re looking at N1.2 billion which is a 54 percent increase over the period. Now as you can see from January in general, we recorded about N2.7 billion in actual fraud losses.”

The most efficient tools used by fraudsters, according to Mr. Adekanye, are betting platforms, wallet accounts, or point-of-sale (POS) agents. These platforms are almost untraceable.

As the recovery rate of e-fraud across multiple media averages around 5% nationwide, he asked for increased authentication and identification of POS agents, cryptocurrency accounts, sports betting accounts, and other entities.

The NeFF Chair, who also serves as the CBN's Director of Payment System Management Financial institutions, according to Musa Jimoh, has no choice but to fight cybercriminals since they have the power to bring down the entire financial system.

He urged greater awareness and education, arguing that as more people use the financial system and the number of transactions rises, there would be more opportunities for a vulnerability that criminals might take advantage of.

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