How forward-thinking financial institutions are preventing fraud in Nigeria

financial institution process

In the first two quarters of 2017, financial institutions in Nigeria reported nearly 17,000 cases of fraud and attempted fraud. Individuals outside of the financial institution, individuals who are non-bank staff, were responsible for the majority of Nigeria’s fraudulent transactions. However, according to the Nigeria Deposit Insurance Corporation, the number of fraud cases linked to internal bank staff substantially increased between 2016 and 2017.

A combined effort to reduce cases of fraud in Nigeria

Key players, like the Central Bank of Nigeria and the Chartered Institute of Bankers of Nigeria (CIBN), are taking steps to protect individuals and their accounts from fraud across the Nigerian banking sector – from commercial banks to microfinance institutions, Cooperative Societies and rural banks.

Visionary financial institutions are following the example set by industry leaders and taking action within their own businesses. Among the many measures that can prevent fraud, microfinance institutions, microfinance banks and Cooperatives Societies are putting these three measures in place to provide more secure transactions:

1. Taking control of user rights within your core banking system

It’s essential that your financial institution can create user groups within your core banking system. With user groups, you can define access levels and control which data in your core banking system the user group can access. This ensures that individuals, including auditors, accountants, managers, consultants and staff can access the data they need, while limiting access to the data that they don’t need.

2. Putting dual transaction approvals in place

Requiring two approvals on transactions and loans from two people within your financial institution can reduce the number of fraudulent transactions in your organisation. To avoid creating bottlenecks, you can enable bulk approvals or require dual approvals only on transactions that are above a minimum value.  

3. Engaging clients with SMS messaging

Your clients in your community can play a role in your financial institution’s fraud prevention when you offer SMS messaging services. With SMS messaging, your clients receive a message confirming their account activity: loan disbursement, loan repayment, deposits and withdrawals.