Nigerian banks record 8,502 fraud cases costing N23.34bn in 9 months

Over the years, it was established that substantial part of bank’s revenue was lost to fraud with no single bank spared.

From the FITC report on Frauds and Forgeries in Banks (January – September 2014), a total of 8,502 cases were reported.

The total amount of money involved was N23.34 billion, out of which N3.01 billion was actually lost.

N20.33 billion of the total amount involved was recovered through the collective efforts of banks’ internal and external control techniques as well as intervention of the law enforcement and anti-graft agencies, according to James Semenitari, managing director/ CEO of Unity Bank plc, as he charged auditors to focus on fraud prevention in the financial services sector, at the 30th quarterly meeting of Committee of Chief Internal Auditors of Banks in Nigeria.

The report is based on 66 returns received from 22 De- posit Money Banks (DMBs) – ranging from fraudulent ATM withdrawals, computer fraud, fraudulent withdraw- als, suppression of entries and opening/operating fraudulent accounts.

“Fraud is an epidemic that has eaten deep into the banking sector and the Nigerian economy.

Its devastating effect manifests itself in the deteriorating balance sheet of banks as well as economic backwardness of third-world countries including Nigeria,” he said.

Speaking on the theme, “operational efficiency: a panacea to the survival of an organisation,” he said in implementing an efficiently driven business model, re- thinking the cost structure was a key area that the banks must consider.

The cost of funds will have to be streamlined to ensure that the funding mix is made up of cheap and sustainable funds.

The rise in availability of alternative channels can also be leveraged upon to reduce the number of otherwise unprofitable traditional branches.

Building of physical branches usually require huge capital outlay that impact on the bank’s balance sheet and provides limited transaction options to customers.

However, investment in alternative channels driven by information technology also requires huge initial cost, but provides significant cost savings in the long term and massive convenience to cus- tomers as it provides multiple transaction options and ease of access.

Leading practice has also shown that with the automation of processes forward looking organisa- tions are adopting a lean structure as a tool to achieve operational efficiency.

HOPE MOSES- ASHIKE