GTCO, UBA, Zenith, Others Increase Investment in Tech as Banks Lose N52.26 Billion to Fraudsters

• In 2024, the aggregate spending of seven major Nigerian banks on IT upgrades came to N460 billion.
• The banks are Access Holdings, GTCO, UBA, Zenith Bank, FCMB, Stanbic, Wema and others
• Nigeria has seen a spike in financial transactions, which has led to an increase in cases of financial system fraud

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

The combined expenditure of seven major Nigerian banks on information technology upgrades in 2024 was N460 billion.

An aggressive push in their digital infrastructure was evident from an examination of the financial statements of Access Holdings Plc, Guaranty Trust Holding Company (GTCO) Plc, United Bank for Africa (UBA) Plc, Zenith Bank Plc, First City Monument Bank (FCMB), Stanbic, and Wema Bank.

According to Daily Trust's analysis, in 2024, Access spent a record 193.5 billion ($120.5 million) on electronic business and technology infrastructure, topping the charts.

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IT expenditures increased by 48% to 88 billion ($56.8 million) for GTCO, doubled to 67.3 billion ($43 million) for Zenith, and increased by 107% to 48 billion ($30.5 million) for UBA.

Stanbic, FCMB, and Wema Bank's tech pushes sucked up N33.5 billion, N26.3 billion, and N5 billion, respectively.

Some of the factors that contributed to the spike in tech spending were exchange rate volatility-induced inflation, significant changes to Flexcube, the company's primary banking software, cybersecurity improvements, and expansion into Tanzania, Namibia, and Hong Kong.

Following the huge investment, Access Holdings recorded drop in its fraud-related losses dropped sharply by 73%.

Access outperforms its rivals thanks to its aggressive tech push. IT expenditures increased by 48% to 88 billion ($56.8 million) for GTCO, doubled to 67.3 billion ($43 million) for Zenith, and increased by 107% to 48 billion ($30.5 million) for UBA.

The sector's fraud losses, however, demonstrated the effect of these investments. From 198.8 million ($123,881) to 159.1 million ($99,421), GTCO's fraud losses decreased little. However, Zenith saw a jump, going from 383.4 million ($238,914) to 5.26 billion ($3.3 million), highlighting the pressing need for improved fraud prevention equipment.

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Why fraud continues to rise

Financial transactions have increased in Nigeria due to the rise of digital payments, and this has coincided with an increase in financial system fraud instances.

According to a report published by Cybervergent, a leading technology company offering automated cybersecurity solutions, at least 586,130 cyberattacks from different threat actors rocked Nigeria's financial institutions and other industries in the first half of 2024.

Cybervergent automated the resolution of 226,103 of the 586,130 cyberthreats it identified; it also safeguarded 19,920 endpoints and examined 304,522 events through its Security Operations Centre (SOC).

Fraud-related losses in Nigeria increased from 1.18 billion across 12,066 instances in the third quarter of 2023 to 10.1 billion across 19,007 cases in the third quarter of 2024, according to research by the Financial Institutions Training Centre (FITC).

Nonetheless, the overall sum decreased from 42.8 billion on a quarter-over-quarter basis, indicating some recent improvements.

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Nigerian financial institutions lost N52.26 billion to fraud in 2024, according to the most recent report from the Nigeria Inter-Bank Settlement System (NIBSS).

When compared to N17.67 billion in 2023, this indicates a considerable rise of N34.59 billion.

The amount lost to fraud has risen by 196% over the last five years, in line with the expansion of financial transactions in the digital payments industry, according to the NIBSS Fraud Report, which tracks fraud activities, whether successful or not, and associated metrics found by regional financial institutions or agencies.

EFCC takes action as fraudsters steal N52.26 billion

Legit.ng reported that despite continuous efforts to improve security systems, Nigerian banks reported a startling N52.26 billion loss to fraud in 2024, a situation that highlights the increasing sophistication of financial crimes.

According to the most recent report from the Nigeria Inter-Bank Settlement System (NIBSS), the banking industry is still seriously threatened by fraudulent activities such as insider collusion, account manipulation, and identity theft.

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However, NIBSS and the Economic and Financial Crimes Commission (EFCC) were able to effectively recover N1.74 billion to stop these illegal actions and reclaim stolen cash.

Source: Legit.ng