Social Engineering Dominates Nigerian Banking Fraud Landscape Despite Sharp Decline in Losses
The Nigeria Inter-Bank Settlement Systems has identified social engineering as the most prevalent fraud technique within Nigeria's banking and digital payments ecosystem, even as overall fraud losses experienced a substantial reduction during 2025.
Premier Oiwoh, Managing Director of NIBSS, disclosed these findings during an industry event held in Lagos, presenting comprehensive data on evolving fraud patterns across traditional banks and emerging fintech platforms.
Significant Reduction in Financial Losses
According to the detailed report, fraud losses plummeted by an impressive 51 percent to N25.85 billion in 2025, compared with the N52.26 billion recorded throughout 2024. Oiwoh characterized this decline as remarkable, attributing it to enhanced coordination across the financial sector and the implementation of more sophisticated monitoring tools by various stakeholders.
Providing historical context, Oiwoh explained that actual fraud losses stood at N17.67 billion in 2023 before surging dramatically to N52.26 billion in 2024, largely due to a single massive fraud incident involving N31.1 billion within one entity. The 2025 figures represent a substantial improvement in the industry's defensive capabilities.
Insider Abuse Emerges as Critical Vulnerability
Within the broader category of social engineering fraud, Oiwoh emphasized that insider abuse or insider involvement currently poses the greatest threat to Nigeria's banking sector. Investigations conducted by NIBSS and partner institutions consistently reveal high levels of internal participation in fraud incidents, whether through direct employee involvement or exploitation of deliberately weakened internal controls.
"The most common fraud technique remains social engineering. Within this category, insider abuse is the greatest threat we face. Insider involvement is high, and recent investigations have confirmed this," Oiwoh stated during his presentation.
He further noted that staff access to sensitive systems and customer data continues to represent a critical vulnerability for both traditional banks and fintech companies when not subjected to proper monitoring and oversight mechanisms.
Digital Channels Remain Primary Fraud Targets
By transaction channel, NIBSS data indicates that fraud remains most prevalent within e-commerce and internet banking platforms. These are closely followed by point-of-sale transactions, mobile payment platforms, and various web-based services across Nigeria's expanding banking and fintech landscape.
Oiwoh observed that criminals are increasingly targeting digital payment channels as cashless transactions continue their rapid expansion, constantly adapting their tactics to exploit both technological weaknesses and predictable human behaviors.
He specifically identified SIM swap fraud, account compromise schemes, and sophisticated phishing attacks as some of the fastest-evolving fraudulent methods within the system, stressing that fraudsters continuously refine their approaches to bypass existing security safeguards.
Coordinated Industry Action Prevents Substantial Losses
Despite these persistent threats, Oiwoh highlighted that coordinated industry action has successfully prevented substantial financial losses. He revealed that approximately N20 billion was saved during 2024 alone through joint efforts by banks, payment service providers, and regulatory authorities.
"Awareness remains critical, as many victims are still easily deceived," he emphasized, underscoring the ongoing need for continuous customer education and stronger internal compliance frameworks across all financial institutions.
Geographical Concentration of Fraud Incidents
Geographically, Lagos State maintains its position as Nigeria's leading fraud hotspot, accounting for a substantial 63 percent of all reported cases. The Federal Capital Territory follows, with Ogun, Rivers, and Delta states completing the list of top five regions for fraudulent activities.
Oiwoh urged financial institutions to prioritize several key areas including:
- Strengthening internal control mechanisms
- Implementing closer monitoring of staff activities
- Sustaining joint industry action through collaborative platforms
- Enhancing trust and information sharing among institutions
He stressed that these measures are essential to maintaining the downward trajectory in fraud losses and protecting Nigeria's growing digital financial ecosystem.
Regulatory Concerns Over Evolving Fraud Risks
Separately, the Central Bank of Nigeria has raised alarms regarding evolving fraud risks within the banking and payments sector, warning that criminals are adopting increasingly sophisticated methods to exploit vulnerabilities.
Speaking at the 2026 Nigeria Electronic Fraud Forum technical kick-off session in Lagos, Philip Ikeazor, CBN Deputy Governor for Financial System Stability, noted that continuous collaboration through the NeFF platform has significantly improved the safety and resilience of Nigeria's payments system since its establishment in 2011.
Ikeazor, represented by Ibrahim Hassan, Director of the Development Finance Institutions Supervision Department, observed that industry-wide cooperation has helped curb fraud-related losses even as digital transactions continue their rapid expansion across the Nigerian economy.
