Nigeria’s banking industry is grappling with a rapid surge in electronic fraud, with annual losses now exceeding N1 trillion, according to industry sources. The growing wave of financial-payment crime has prompted renewed calls for the Central Bank of Nigeria (CBN) to modernise its decade-old security framework and upgrade authentication standards from two-factor authentication (2FA) to three-factor authentication (3FA).
Data from the sector indicates that the scale and sophistication of digital theft, particularly unauthorised transactions, has increased sharply, far outpacing the protections currently available to consumers. Public complaints continue to rise, with many customers reporting non-reimbursement for disputed or fraudulent transfers.
Under existing Nigerian law, banks are required to compensate victims up to N5 million per account, a threshold critics say is inadequate in today’s digital banking environment. Even at this limit, repayment timelines are largely discretionary and rarely enforced, leaving many victims without relief.
Industry executives note that electronic fraud losses have risen nearly tenfold in six years, from N133 billion to over N1 trillion, bringing Nigeria’s nominal losses close to the UK’s £700 million (≈N1.3tn) recorded in 2024. However, unlike the UK—where 98% of fraud victims are reimbursed—Nigeria’s smaller banking and insurance ecosystem leaves depositors disproportionately exposed.
Ive Chike Meme, director at fintech intelligence firm Environ, warned that Nigerian banks remain “dangerously under-protected” as criminals increasingly deploy sophisticated digital tools, including artificial intelligence. “AI has already rendered voice-biometric banking obsolete, and criminals will soon be able to compromise passwords, PINs, and tokens at scale,” he said.
Meme highlighted that insider collusion and internal financial leaks account for a significant portion of fraud, advocating for a biometric proof-of-life digital signature system that cannot be spoofed by employees or external actors. Environ is currently discussing deployment of such a system with the Nigerian Financial Intelligence Unit (NFIU) through Nigeria’s inaugural Financial Intelligence Public-Private Partnership.
It has been a decade since the CBN last implemented a major fraud-control upgrade with the rollout of 2FA in 2015. Since then, cyber-fraud has evolved faster than regulatory measures, and neither the Economic and Financial Crimes Commission (EFCC) nor the NFIU currently has the authority to compel banks to adopt stronger authentication systems.
“The CBN will inevitably have to intervene again,” Meme said. “To maintain confidence in Nigeria’s payment system, the country must move from 2FA to 3FA proof-of-life authentication. Technology is the only scalable solution—far more realistic than trying to build a N250 trillion insurance buffer.”
Environ recently launched its Payments Protection Intelligence Platform for the Nigerian banking sector and argues that early adopters of advanced security will attract more depositors in a climate of rising digital fraud. Analysts note that while retail customers are frequently targeted, high-value corporate and government accounts are also vulnerable, yet remain subject to the same N5 million reimbursement cap, exposing depositors to potentially catastrophic losses.
“Until Nigeria updates its fraud-combat controls and strengthens consumer-protection frameworks, bank customers—large and small—remain at growing risk,” Meme concluded.
