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Tag: frauds

  • Banks unwilling to disclose frauds, says NCC

    Banks unwilling to disclose frauds, says NCC

    There is an increase in banking frauds than banks are willing to disclose, Executive Vice Chairman of the Nigeria Communication Commission (NCC), Professor Umaru Danbatta, has alleged.

    He spoke in Minna while presenting a paper titled ’promoting regulatory framework for safety and security on the internet’ at the North Central Zonal Internet Governance Forum.

    According to him, banks are unwilling to discuss frauds among them due to fear of liquidation and loss of customer.

    “The banks do not report many frauds because of liquidation problems. They are scared that their customers will leave if they report such incidences.

    “These banks feel that the customers will not have confidence in them anymore,” he stressed.

    Danbatta, however, said non-disclosure by the banks is militating against the statistics towards ensuring cyber security.

    He pointed out only collaboration and cooperation between private and public organisations will build the capacity of cyber security policies across the nation.

    Chairperson of the Nigeria Internet Governance Forum, Mrs. Mary Uduma, called for adequate sensitisation on cyber security and hate speeches.

    She added hate speeches can destroy a community, stating laws against hate speech need to be strengthened for effective coordination.

    Coordinator of the Hate Speech Project, Isah Garba, said that its monitoring project revealed the nation recorded 6,258 hate speeches in 2016.

    Of the hate speeches, he said 2,603 were of religious contents, 421 were political, 2, 449 ethnic-based, 283 Biafra, 134 on farmer herders and 118 on bye elections.

  • Bank frauds

    •There must be synergy among the workers, employers and security agencies to stem the tide

    The report by the Nigeria Deposit Insurance Corporation (NDIC) that the banking sector recorded 12,279 fraud cases, worth N18 billion in the 2015 financial year should worry the security agencies. According to the report, there was an increase in the number of cases by 15 per cent, compared to 10,612 cases recorded in 2014; even though a higher sum of N25.6 billion was involved in the previous year. The report also put the actual loss suffered at N3.02 billion, as against N6.19 billion loss suffered in 2014.

    With the reinvigoration of the Economic and Financial Crimes Commission (EFCC) under Ibrahim Magu, it is time to beam the searchlight on the financial sector. Under Nuhu Ribadu, the EFCC was a potent fear for those engaged in financial crimes, and some measure of success was achieved. While the ongoing efforts to recover our stolen common wealth from corrupt political actors should be sustained, the EFCC and the police fraud unit should also show similar vigour in fighting financial crimes.

    Indeed, there is the need for transparency in the financial sector, to stem the debilitating corruption in the country. Most of the frauds involving huge sums of money go through the banks and other financial institutions. Even with some clever officials engaging in tricky measures to hide their loot, most of them still use the banks to either wire the sums stolen out of the country, or make one traceable investment or another.

    We also think it is the cheap money easily made from the hot deposits by the banks and its senior officials that has discouraged them from their traditional intermediary roles towards the growth of the economy. The recent tales by one sitting governor under investigation by EFCC, against a bank, if true, shows how desperate some of the bank officials can be, to gains access to the loot that come from those occupying public offices in the country. Unless the loopholes are blocked, it will be difficult to convince banks to lend to the real sector, instead of the dubious capital transfers for imaginary imports, mostly by the looters.

    Perhaps the NDIC should send its report to the EFCC and the police, so that some of the cases can be further investigated. After all, most banks will have full proof evidence of the fraudulent transactions, including videos, pictures and handwritten documents, which can be used to prosecute the cases in court. While the banks may not have the time or wish to expend resources to individually prosecute the cases, the state represented by the prosecutor agencies, should not allow crimes to be committed, and the faith of those involved left to the financial institutions.

    As shown by the NDIC’s report, about 38.59 per cent of the frauds and forgeries were committed by temporary staff. The import of this is that the bank’s duplicitous labour practices of engaging casual workers and banning unionisation may actually be fuelling unwholesome work attitudes among the staff without job security. While we are not making excuses for fraud and criminality, it is dubious for banks to declare humongous profits, even when they engage in bad labour practices against hapless Nigerians.

    To stem criminality in the financial sector, particularly the banks, there has to be a synergy among the employers, employees and the security agencies. This is critical to the national wellbeing, as the economy is more like the blood, and the banks the veins upon which a country’s economy is dependent.

  • Motivational speakers are frauds?

    Motivational speakers are frauds, they are cheats.” “They share principles that they can’t support with their personal experiences.” “They only stir up emotions.” These and several other statements are very common when people talk about motivational speaking. People feel embittered about some persons who appear to make money off “naïve” audience by downloading information from books and sharing them without proofs. While I agree completely, I must also be quick to say that there are several other speakers who have acquired the right to speak through their “hard earned” experiences.

    Motivation, according to Wordweb, is “The psychological feature that arouses an organism to action toward a desired goal.”  Hence, a motivational speech aims at arousing listeners to take action in order to achieve their desired goals. How better can we start the year? Wouldn’t you prefer to listen to information that propels you towards something worthwhile than one that convinces you that you are doomed to fail? Let’s examine a few grudges that people have against motivational speeches and how we can convert them for our benefit:

    • They stir up emotions: a lot of people believe that a motivational speech only takes one on an emotional trip, after which it does nothing. They believe that the speed with which you get excited during the speech is the speed with which you lose the excitement afterwards. Well, one thing we have to learn about emotions is that they are transient. Someone who was happy a few minutes ago may be sad now. However, the fact that they change does not make them bad; it just means that we have to learn how to manage them. I read a little about rockets, particularly the United States’ NASA Space Shuttle. I discovered that it made use of Solid Rocket Boosters (SRBs), which provided about 83% of the thrust needed for liftoff by the shuttle within the first two minutes of its flight. The boosters helped to launch the space shuttle into earth orbit but were dropped after the fuel was expended. After the rocket discarded the boosters, its engine continued the job. Relating this to emotions, particularly excitement, my perspective is that when one is excited, energy is released, that is why some people shout or even jump. The purpose of the emotion is to launch us upward, just like the rocket boosters, but our own engines must take over the job. Just as boosters don’t last, emotions don’t too, but we can’t do without them. In 2016, expose yourself to information that will generate the kind of energy you need for liftoff, but remember it is only half of the job. You need more that emotions to arrive at your destination. Getting the information is one thing, using it effectively is quite another.
    • They paint the picture of a glamorous future: some people hate motivational speeches because they make the future seem like a garden of roses. I don’t have any problem with that at all. Is there anyone who desires a future that is worse than the present? God forbid. Of course, whoever is painting that glamourous picture must also enlighten the listeners of the price that must be paid for such a future, which I believe should include diligence, among other things. While I don’t believe in baseless dreams, I believe that there is no point dreaming of a future that is not better than the present. Hence, your dream must be good enough to make you sacrifice the pleasures of the present to achieve it. A lot of times, people are too deep in their depressing situations that they need someone to give them a reason to hope. Les Brown, one of the world’s leading public speakers said, “you can’t see a picture when you are in the frame.” I believe you need someone who has been where you are now and who believes that you can find your way to where you want to be if only you make the right efforts.
    • They de-emphasise challenges and focus on opportunities: it’s interesting how something that is meant to make people succeed make them angry. Some people are really mad that some motivational speeches make the audience take their attention off the problem. For as long as the speech doesn’t deny that there are challenges along the way to success, I think it is a great thing. A lot of people are too afraid of problems to consider the possibility of success. Motivational speeches draw from the stories of the speakers to encourage listeners not to stop trying. This presupposes that the speaker has a proof of achieving success in spite of obvious challenges.

    I am not suggesting that you go out there and grab the materials of just any motivational speaker. My point is that you need to be motivated. You need to boost your speed by knowing that there is a future worth fighting for. Wouldn’t you rather be inspired by someone who is producing good results in your area of interest than be depressed by someone who has nothing but stories of woes?

  • CIBN vows to stem bank frauds

    CIBN vows to stem bank frauds

    The Chartered Institute of Bankers of Nigeria (CIBN) will not relent in its efforts to curb unethical practices in banks sector in line with its code of ethics, its P wresident, Mrs. Debola Osibogun, has said.

    Speaking at CIBN Annual General Meeting (AGM) in Lagos, Mrs. Osibogun said the institute has been making progress since the introduction of the Code of Ethics and Professionalism a year ago.

    The committee, he said, settled some cases between banks and their customers.

    She said banks’ workers have attested to the Code of Conduct, adding that forms were being processed into the institute’s database to assist in tracking cases of misconduct.

    Mrs Osibogun said: “Banks have increased their reports on employees that violate the code for investigation and discipline”.

    She promised to continue to promote professionalism, ensuring that the banking industry is rid of sharp practices.

    She implored banks to report fraudulent staff to the institute for proper interrogation and sanction.

    The institute’s account for the year ended December 2014 showed it recorded N645 million total revenues against N619 million posted in 2013, representing an increase 4.11 per cent.

    Mrs Osibogun said it recorded   a growth of 2.48 per cent from a net worth of N1.209 billion in 2013 to N1.239 billion in 2014.

    She said the institute made a surplus of N5.7million, and that the projected budget surplus of N126 million could not be realised due to a shortfall in sponsorship revenues, payment of severance package of disengaged staff and the huge cost of maintenance of Bankers House.

    “There is a slight improvement in the ratio of Internally Generated Revenue (IGR) to corporate members’ subscriptions to 80 per cent: 20 per cent, in the year under review, from 78 per cent:22 per cent recorded in 2013. Our desire to reduce dependence on corporate members’ subscriptions in the medium and long-term fund activities will continue to be pursued until it is achieved,” she noted.

  • CBN: banks lost N20b to frauds in six months

    CBN: banks lost N20b to frauds in six months

    The Central Bank of Nigeria (CBN) has traced rising cases of e-fraud in international card transactions to increased insider abuse. The fraud where perpetrated through theft and authorisation, it said.

    CBN’s report for the first half of 2013 contained in the ‘KPMG 2014  Customer Satisfaction Survey’ indicated that there were 2,478 fraud and forgery cases valued at over N20 billion. The figure represented an eight per cent increase over the previous year, and represents a significant increase in value of over 200 per cent from the 2012 figures.

    The report showed that two per cent of retail bank customers were defrauded in the last one year.

    CBN Director, Banking and Payments System Department, ‘Dipo Fatokun, said increased use of automation in most payment processes escalated the insider abuse because of banks’ weak authentication procedures.

    He said frauds were rampant when international hybrid cards issued by Nigerian banks are used in non-EMV environments, like the United States.

    EMV stands for Europay, MasterCard and Visa, a global standard for interoperation of integrated circuit cards for authenticating transactions.

    He advised banks to collate all their card frauds abroad and send to CBN not later than Friday. It also directed that all data on card-fraud occurring abroad should be rendered on the Nigeria Interbank Settlement System (NIBSS) fraud portal.

    He directed banks to implement a maker/checker control structure for all payment platforms, including account and database system maintenance on core banking systems. The lenders, he said, are to implement two factor authentication at login points for applications driving transfers, withdrawals, deposit, standing order, account maintenance and system maintenance processes.

    He said: “An implementation plan should be submitted to the Central Bank by January 30 and all banks are expected to fully comply by December 31, failing which defaulting banks would incur a penalty of N50,000 daily.”

    He said from next month banks would ensure that, only customers who indicate their intension of travelling to non-EMV jurisdictions would have their cards default to the magnetic stripe and for the period indicated by the cardholder only. To this end, banks should ensure that their customers are adequately educated.

    Meanwhile, the naira recovered from a record intraday low after two commercial lenders and an energy company sold dollars on the interbank market ahead of a CBN interest rate meeting, dealers said.

    The two lenders and Nigeria’s LNG sold an undisclosed amount of dollars, helping the naira to gain 2.3 per cent against the greenback to N187.50. The naira had earlier hit a record intraday low of N191.85 to the dollar.

    Dealers said the lenders had to sell dollars to remain within a regulatory open limit position on hard currency set by the CBN, while the energy company bought naira for its local operation.

     

  • ‘Most banks’ frauds are insider-related’

    ‘Most banks’ frauds are insider-related’

    Taiwo Otiti is the Country General Manager of IBM West Africa. The Information Technology (IT) expert, who is responsible for the firm’s business operations and growth strategies in Nigeria, Ghana, Sierra Leone and other emerging markets in Anglophone West Africa, speaks with COLLINS NWEZE on the cash-less economy, how the company is helping banks, telcos and manufacturers in strengthening their ITs to check fraud, among others.

     

    What is your view on high prevalence of fraud and security of information technology (IT) which remains major concerns among bank customers and operators in the country?

    I was the first to put in automated teller machine (ATM) in the former Societe Generale Bank of Nigeria (SGBN) in 1999. I also wrote the book: Tragedy for Payment System in Nigeria. So, I am versed on the issue of security in e-payment system.

    When we started deploying ATMs, it was in what we called mag-stripes. That was riddled with a lot of fraud because those cards can be cloned. By 2006, when we set up Interswitch, we started with mag-stripes. And later when we brought in ValuCard, we implemented chip and pin-based system. All the other schemes later moved to chip and pin, including Interswitch. Mastercard also came and they all became chip and pin. Then, the Central Bank of Nigeria (CBN) mandated in 2005 that we should all go chip and pin. So, every card in Nigeria is now chip and pin.

    Therefore, it is difficult for people to scheme; that is, putting something on the ATM that can steal your secret codes.

    How have you been able to check that?

    We have been able to put anti-scheming devices on ATMs. We have also reduced the stealing of cards. I think the next level is that most of the frauds are internal to the banks themselves.

    So, people are priming cards on customers’ accounts and giving them to fraudsters to use. Those are the risk areas. The cards origination, processing and delivery process need to be intact. A lot of banks look at that. We also play in areas where we put intelligence that can tell you what is going on in your database. In terms of consultancy for security, we are also very high; we are actually one of the best in the world on that. In terms of assets that mitigate security, we also play number one in that space.

    So, what you are saying is that internal fraud is where the biggest challenge is?

    What I am saying is that most of the frauds are insider related. We also have issues on internet banking where people are stealing people’s Personal Identification Number (PIN). We also got tokens. We also see people going around visiting sites where the tokens can be cloned. They originate and ask you to put your PIN. They take the PIN and originate transaction on your account by stealing some of your identity. A lot of internet banking providers are talking to IBM on how to secure their customers’ internet banking applications. We have been able to show them how to tunnel and stop anti-scheming devices. We also teach them how to add infrastructure to stop all these types of incidents.

    IBM has been involved in information technology (IT) processing in banks. Can you tell us how you have been integrating banks’ IT during the banking reforms?

    IBM has been involved with banks long before the reforms. We had the first generation of banks in the country running on IBM platforms. We were here when there were 126 banks; that later came to 89 banks and subsequently reduced to 25 banks during the banking consolidation of 2005.

    We also put unit boxes in Zenith Bank around 2002 to 2006. And then the biggest, was when FirstBank of Nigeria centralised its operations in 2001. We were able to put in what we call regattas into FirstBank. It is the highest-end unit boxes. FirstBank was among the first to install such boxes. They are also putting what we call Storage Area Network. We basically run FirstBank’s banking software on our enterprise platform. We have a history of running very high volumes. FirstBank was the biggest bank then.

    From then onawrds, we started taking more market share because when people realised that IBM provides IT solutions at lower costs, many banks began to subscribe to our services.

    Did you gain more market share after the banking consolidation?

    After consolidation, we actually raised market share by 50 per cent. Between 2010 and now, we have taken another 20 per cent, which takes us to about 70 per cent share in the enterprise boxes that run the banking applications.

    There were several reasons this happened. We tied relationship with many of them. We also have close relationship with independent private vendors, who are the ones that own the banking applications. Finacle of Infosys and also Flexcube which is owned by Oracle. We have very tight relationship with P24, which is by Terminals. We have a service competent centre, which we built for them in France. Based on that, we have a lot of benchmark and experience in using these applications efficiently in our boxes.

    That also gave us a lot of market share in the industry. Apart from that, IBM basically runs a lot of the biggest banks in the world. We are not only putting hardware in, but as a master of integration, we also have integration software.

    So, from payment system coming to your swift network, to your automated clearing house, to your workflow that runs your businesses, we have software and assets that deal with all of that.

    Does this mean that the cash-less policy of the CBN is bringing more business to your company?

    Invariably, we are gaining part of it in terms of capacity building for some banks. We are helping many of the banks to integrate into the cash-less economy. We are helping them in implementing some of the things they are doing.

    After South Africa, Nigeria is next as far as Africa investment is concerned. Is it the same investment that IBM is spreading across the continent? What are your plans for Nigeria?

    I think you have to understand that Nigeria has the biggest population in Africa. The economy is becoming more diversified. We have Gross Domestic Growth (GDG) of about seven per cent year-on-year. What that tells you is that Nigeria is moving forward in the right direction. We are diversifying away from just only oil into agriculture, minerals, gas, liquefied natural gas. We have started to see a lot of work in the privatisation of electricity. So, that automatically tells you that the country is moving in the right direction. So, if you don’t invest now, you are going to be playing catch-up.

    Recently, IBM organised a conference on Small and Medium Scale Enterprises (SMEs) in which International Finance Corporation (IFC) was involved. What opportunities do you see in that subsector of the economy?

    I think, SMEs no matter what economy you are looking into, are the backbone to the economies. For what we are doing with IFC, which to us is a social service to the society where we operate, it will help those SMEs on how to do business and manage them properly. We are actually putting in the SMEs Toolkit to help them manage their businesses properly.

    We also do mentoring. We are nurturing SMEs to help them grow. We are doing a lot of that work. We are looking at how to operate in an environment and help the environment grow. Our calculation is that as those SMEs grow, they may need some of our tools. Some of our staff also take their time out to mentor these SMEs to help them grow.

    Banks avoid lending to the SMEs’ subsector because of the high level of risks involved. Will that not work against your interest in that subsector, especially when funding becomes a major challenge?

    I think, economically, in the short term when you train SMEs to know how to run their businesses properly, with cash-less banking, so many data will start going to the banks. Then, the banks would start using analytics. What you will find is that the data will assist you in understanding what type of risks you are about to take on a particular SME. So, you know their behavioural pattern and how much money you can lend to them in terms of risk.

    Therefore, we are just at the infancy of what we call big data. We have the data, and then you look at the data and that will allow you do better loan origination in that SMEs. Remember, we have put a credit bureau and you can check the amount of loans these SMEs have taken in other banks. So, you can now determine how much loan you want to send to these SMEs.

    Pure system remains one of your flagship products. How are you deploying it into meeting clients’ needs in the African and Nigerian market?

    Pure system is what we call a converged system. In the olden days, we used to sell unit boxes to clients, also unit servers, storage, and management software. In a converged system, we put all those things together. We have not just put them together, but actually engineered the system. So, everything becomes a system, which works seamlessly together fitting into the server. We monitor applications inside the boxes and automatically managing your workload, network and user experience. Before now, different people manage your unit boxes, unit servers, storage, and management soft ware. But now, these can be managed together under the Pure System.

    Also, lack of resources has created a situation in corporate IT globally where $2.5 trillion or 70 per cent of the global IT budget is spent just making sure the companies’ infrastructure works. For more than 100 years, IBM has provided organisations with the advances in technology to help transform their work and meet the needs of clients.

    As a result, one in five projects never sees the light of day and there is a backlog in IT of more than 18 months. Pure System is a new class of expert integrated systems designed to help businesses address the complexity of enterprise IT. It is the result of $2 billion in Research and Development and acquisitions over four years, an unprecedented move by IBM to integrate IT elements, both physical and virtual.

    What is your strategy and view about the unbanked within the population?

    You have to understand that it is not only the banks that deal with the unbanked within the population. Telcos, manufacturing among other sectors, are also involved. Our view is to put something that brings everybody together. It will look like a supply chain environment. And also managing the data that allows you understand the products that are selling well. So, we are talking about bringing integration and analytics together to help the banks render services to this group of people.

    The issue is how to bring everybody together using the right technology and agent network. We have the tools that can do that. We are talking to all the parties to see how we can work together.

    How widely used are IBM technologies?

    All the big banks in the world are connected to platforms. Also, a lot of the independent big organisations build their software on top of some of our assets. That gives us a lot of leverage in marketing our products. For instance, Finacle runs on our application servers. If you are going to buy Finacle, automatically you have to buy our application servers.

    P24 for instance is database independent, so they can run our Oracle or GB2. That also helps us to sell some of our database products. We have a lot of assets that are involved in risk management such as operational, market and credit risks. We have a lot of assets in those orientations. We also have the  International Financial Reporting Standard, which is about relating your books in international way as stipulated by regulators. So, we have a lot of assets. Also, when it comes to analytics, we have a lot of assets, which are segmented into various industries, such as banking, retail, telecommunications, manufacturing, and other sectors, and they give us a lot of leverage. So, we have a lot of assets that are prewired for those type of industries and that gives us a lot of leverage.

    There are other things, such as our being able to take client’s needs from consultancy to delivery. We are also go-partners and biggest delivery shop for SAP and Oracle. We do consulting for you in terms of what are your business process, and how are you going to fit them into either SAP or Oracle applications? And we also implement it for you. We are also very wide related to other products.

    The cash-less policy of the Central Bank of Nigeria (CBN) is supposed to have a lot of impact on how banking is done in terms of service offerings. What opportunity do you see in this policy as an operator and in the banking industry?

    In terms of the banking system, remember, the cash-less economy makes it easy for you to have much more transactions, especially high volumes. So, that automatically is related to us. So, cash-less economy is the integration of many things from Automated Teller Machines (ATMs) to Point of Sale (PoS) to serve that you are originating from various channels, such as mobile banking, internet banking and all that. But the beauty of all that is that we have the integration organisations’ point of view. We can give you integration to integrate everything.

    I was one of the committee members who wrote the 2012 Payment System Framework for the CBN. We also understand the basis of cash-less society where it comes from channels, such as ATMs or the back-end infrastructure, such as the automated clearing system, all the way to interSwitch. We also have the picture of banking the system that integrates all that, which we also run in Europe, Middle East, Asia, America, among others. A lot of big banks also run those framework. A lot of things we do,ww for instance, help our customers in what we call the enterprise architect engagement on infrastructure or data. We are doing all that for the Central Bank too.

    The African market is seen as the next investment frontier. What is IBM doing to tap into the opportunities available in this market?

    All the way to Sub-Saharan Africa, to South Africa, there is a lot of more governance in government. We have moved away from the era of coups to that of democracy. Governments are becoming more stable. There is a lot of more investments coming into our region. We are creating middle class in the whole region, and middle class means growth because they are the ones who consume things.

    All large corporates that have international clout, that is what they want. Africa is the last investment frontier. We have invested in Asia, India, and now Africa is the next area everybody is investing in.

     

     

  • Electronic banking, electronic frauds

    Electronic banking, electronic frauds

    With the introduction of electronic banking, many thought that frauds would become a thing of the past. How wrong they are. Bank frauds are rising more than ever before despite the coming of mobile money, Automated Teller Machines (ATMs), among other electronic banking products. LUCAS AJANAKU reports.

     

    THE Managing Director, SO4 Engineering Services, Soji Oluwasuyi, will not forget in a hurry what happened to him about four years ago when he lost money through the automated teller machine (ATM).

    According to him, he withdrew N20,000 from a branch of his bank on Idimu Road, a Lagos suburb and headed for the Island to fix an electrical fault for a client.

    “I was on top of the roof when a text message (alert) came to my mobile phone. When I opened it, it was a transaction alert that N40,000 had been withdrawn from my account in Gbaja Market. That was the first time I will hear about the existence of a market bearing that name. I screamed and someone told me it was somewhere in Yaba area or so. I was shocked because I still had the ATM card in my breast pocket. The following day, I rushed to my bank to complain and I was given a piece of paper to write a petition. I did that but that ended the story,” he said.

    He was just one of those who lost money to the ATM fraud that rocked the industry during the formative years of its adoption. The situation has since changed with the introduction of fraud-resistant technology in ATM cards.

    Deputy Governor, Banking Supervision, CBN, Tunde Lemo, said ATM fraud has gone down tremendously to about 98 per cent.

    But it is against the backdrop of previous experience and the fact that Nigerians are smart that a recent report of the global information technology (IT) security firm, MWR InfoSecurity becomes relevant.

    Mobile banking on Android phones could put consumers at risk of fraud and cost banks millions a year, MWR InfoSecurity warned.

    MWR Labs, the research arm of MWR InfoSecurity, investigated the security standards of leading Android mobile phone brands to determine the exposure to risk of consumers who use mobile devices phones for online banking, Mybroadband, noted.

    According to a recent research, Android is the leading phone platform with over 50 per cent market share, driving the development of mobile banking apps for the Android ecosystem while results indicated that on some handsets, as many as 64 per cent of manufacturer-added applications or apps were exposing users to serious security issues.

    Commenting on the development, Managing Director, MWR, South Africa, said: “We found that while banking apps were generally well written and had very few security issues, the integrity of consumer phones was often compromised by software provided by the phone manufacturer or additional software added by the network provider, exposing online banking customers to potential fraud.

    “Some of the leading Android handset manufacturers are already looking at shipping mobile devices with native near-field communication (NFC) payment functionalities but if the software in the phones is not secure, the risk will then be even higher.”

    According to him, the increasing number of merchants migrating to smartphone based Point of Sale (POS) devices, by using Bluetooth or directly connected chip-and-pin accessories for iPhone or Android, for example, is symptomatic of the fact that mobile phones will become a critical element in the payment chain, warning that if they are not adequately protected, they could introduce additional risks for card fraud that could cost banks millions a year.

    These findings were illustrated by the ruling on HTC by the Federal Trade Commission in the United States of America on February 22 that directed that HTC take immediate action to address security weaknesses in the software developed for its mobile devices that allowed location tracking and the theft of personal information stored on users’ phones.

    According to MWR Labs, six classes of potential vulnerabilities in apps and packages in the leading brands and mobile phones were looked at using a modified version of Mercury, its security testing framework, to automatically scan the devices and identify security weaknesses, adding that it discovered security vulnerabilities in software added by phone manufacturers or network providers which could be targeted by a malicious application inadvertently downloaded by the user.

    The report added that these weak apps often have more permission that allow them to access contacts, make telephone calls and even record the content of those calls, meaning that the potential consequences are serious and sensitive data could be compromised in the process.

    Other apps were also discovered that allowed further apps to be installed with an arbitrary set of permissions, essentially leaving consumers fully exposed to fraud.

    “The move by consumers away from PC’s for online banking to mobile platforms will inevitably be followed by the criminal gangs who have been successfully targeting online banking for years. We have already seen many examples of malicious apps sending premium rate text messages and expect there will be a natural progression to higher value areas such as payments and banking,” Grobbelaar said.

    Managing Director, New Horizons, Tim Akano, warns that the banking industry will be the target of attack this year. According to him, hackers will compromise the network of the lenders and sell data for profit.

    The warning notwithstanding, mobile money has continued to face some challenges in the country leading to its sluggsih uptake.

    Managing Director, Parkway Projects Limited, Uzor Eziukwu, disagrees. He said the uptake has not been slow, adding that it would take sometime before the initiative would be stabilised in the country.

    Parkway is a leading provider of home grown e-banking and e-payment solutions in Nigeria and reaching out to the rest of Africa

    “I don’t agree that it has been slow and sluggish. Generally, financial services have their life cycle. We have the same experience with ATM cards, which took about three years to pick up. We are just one year into mobile money or mobile payment, the response is ok but there are challenges like infrastructural challenges but it is still (in its) early days, we will get all these things sorted out,” he said.

    According to Visa Incorporated and Fundamo, the Visa-owned mobile money platform, while the market has potential to lead the world in mobile money, only 35 per cent of the citizens are aware of mobile money

    A study by Visa revealed that only 35 per cent of respondents were aware of mobile money versus an average of 56 per cent across all six of the emerging markets surveyed.

    According to the study, there were 110 million mobile subscribers in Nigeria, but only 56 million of them have bank accounts, making it one of the most exciting mobile money markets in the world because of its huge potentials. The report noted: “Consumers’ needs for financial services are far more sophisticated than previously believed and go well beyond the established transaction set offered by mobile money services today.”

    The Visa study suggested that the success of mobile financial services was determined by how deeply a mobile money provider understood its customers and tailored the service to their needs as well as those of mobile money agents from service menus to marketing and education.

    To raise awareness and drive adoption, it said providers needed to educate consumers on the key benefits and uses of mobile money services, whilst tackling barriers to uptake. According to the study, 83 per cent of respondents in Nigeria cited “safety of not having to carry around a lot of cash” as the primary benefit of mobile money, adding that the greatest barrier to adoption in the country was whether those money was sent to would know how to receive it.

    A mobile payment expert, Emmanuel Okegwale, identified mobile banking application interoperability as a key challenge in developing a sophisticated mobile payment system in the country. “The single reason for this is the manner in which mobile phone applications evolved over time, device manufacturers focused on particular standard and this led to a proliferation of applications. The financial regulator, CBN, should look into this issue at this early stage so that mobile banking ecosystem can be robust with national standard that cuts across banks. “Bank-specific mobile banking platforms is akin to having each bank deploying its own ATM technology which other bank customers cannot access,” he said, adding that interoperability can also help to evolve a standard that will enable low end phones, which are excluded, to do mobile banking.

    He said apps distribution for mobile banking is another area where some banks are facing challenges. According to him, while some forward looking banks are overhauling their gateways and reducing their reliance on mobile operators’settings to enable customers’ phones, others are actually asking that customers come with regular operator settings, which in many instances, might not be correct configurations settings.

    Analysts say mobile banking holds the solution for the CBN’s financial inclusion strategy. They, therefore, urge stakeholders in the ecosystem to find a way round the security challenge.

     

  • ‘National ID’ll curb frauds in banks’

    The Director-General, National Identity Management Commission, Mr Chris Onyemenan, has said fraud and related activities in banks would reduce when the country has a national identity database.

    Speaking at a stakeholders’ forum in Lagos, Onyemenan said fraud persisted in the financial system because there was no national identity database in place.

    He said: “By the time Nigeria has a centralised identity management system in place, it would be difficult for people to commit fraud and escape. When there is national identity base on ground, people would have all their details in one place. Their names, pictures, signatures, next of kin, among other information are going to be recorded. It would be easier for banks to get an update information on their customers among other stakeholders in the financial chain.”

    Onyemenan said the cash-less economy programme would succeed with time, noting that countries that have implemented it experienced difficulties at the initial stage.

    “Rome was not built in a day. The Cash-less economic scheme would take some time before it enjoys wide acceptability. Continuous awareness programme is key to the acceptability of the cashless programme in Nigeria,” he said.

     

  • NIBSS, NIMC tackle e-payment frauds

    From left: Aladekomo; Executive Director, Business Development, Nigeria Inter-Bank Settlement System (NIBBS), Mrs Christabel Onyejekwe and Shonubi during Aladekomo’s visit to NIBBS headquaters in Lagos.

    The Nigerian Inter-Bank Settlement System (NIBSS) is poised to tackle electronic payment fraud, its Managing Director, Mr Ade Osinubi, has said.
    Osinubi said it was necessary to improve electronic payment transactions and engender growth in the economy.
    Speaking during a visit of the management of the Nigerian Computer Society (NCS) to NIBBS‘s head office in Lagos, Osinubi said efforts were being made among the stakeholders in the financial chains to rid the country of fraud in the electronic payment system and allied areas.

    He said partnerships are evolving to reduce the hiccups in the electronic modes of payments, and further reduce the cost of managing cash in the economy.

    Osinubi said electronic frauds hinder the growth of the financial sector and the economy, stressing that the only way to check the malaise is to fight it headlong.

    He said there iwas the need to take security serious in the information and technology (IT)-driven society, adding that customers and financial institutions must be alert to reduce the fraud.

    NCS President Mr Demola Aladekomo said NIBBS has helped to implement the cheque truncation policy, among other measures put in place to enhance the quality of e-payment transactions.
    He said more needed to be done to make e-payment transactions free of fraud.

    Also, Chief Executive Officer, the National Identity Management Commission (NIMC), Mr Chris Onyemenan, a lawyer, said the agency would help in reducing fraudulent practices in the financial industry.

    Onyemenan told The Nation that the leadership of NIMC would develop a central national database, multi-factor authentication system and enrolment and card issuing services to identify all Nigerians and plug the loopholes through which fraud could perpetrated.
    Others, he said, are development of identification and verification processes in Nigeria to foster the growth of the country.
    He said the implementation of the unique identification number (UIM) project of the NIMC in particular was crucial to the success of the electronic payment system initiated by the Central Bank of Nigeria CBN).