Fintechs Lose Over ₦5 Billion in Ongoing Fraud Spree, Insider Jobs Surge

A recent report by Nairametrics has uncovered a staggering increase in fraudulent activities targeting financial technology institutions, with more than ₦5 billion reportedly stolen within an eight-month period. This surge in fraudulent incidents has been largely attributed to a rise in insider involvement, posing a substantial challenge for these companies in securing their systems effectively.

Darlington Onyeagoro, CEO of Aladin, a prominent Nigerian digital bank, spoke to Nairametrics, revealing a grave incident in which hackers gained unauthorized access to over ₦800 million belonging to a Nigerian fintech. Onyeagoro pointed out that the involvement of insiders in these fraudulent activities has been a significant concern and a major hurdle for fintech companies operating in Nigeria.

The breaches also revealed that hacks were traced back to sister fintech platforms, indicating that even well-secured payment platforms are susceptible to compromise when connected to another platform with deficient cybersecurity measures.

One of the recent high-profile incidents occurred at the renowned crypto platform, Patricia, which has been facing challenges with payment issues after suffering substantial financial losses at the hands of hackers. Earlier in May, Patricia disclosed that both Bitcoin and naira assets were compromised, leading to an estimated loss of around $2 million, according to a report by Techcabal. CEO Hanu Fejiro has committed to initiating customer repayments from November 20, 2023.

Similarly, Flutterwave, another fintech, experienced a hack earlier this year resulting in approximately ₦2.9 billion being siphoned from the platform. While the company urged users to activate safety protocols to safeguard their funds, it refrained from publicly disclosing the exact amount lost.

This hack came to light through court documents, revealing that Flutterwave’s legal counsel had filed a petition to the police. The documentation detailed the fraudulent activities and requested the freezing of 107 bank accounts in 27 banks to facilitate the recovery of the stolen funds.

According to the Financial Institutions Training Centre’s Fraud and Forgeries Report, Nigerian commercial banks collectively lost ₦5.79 billion to fraud-related activities in the second quarter of 2023. This figure represents a staggering 1,125.03% increase compared to the ₦472 million lost in the first quarter of the same year.

The report further highlighted a concerning 20.55% rise in insider involvement in fraudulent activities, indicating a worrying trend of inside jobs contributing significantly to the escalating fraud issues within the financial technology sector.