MONEY MARKET: Assessing Customers’ Losses To Fraudsters Through Digital Banking

With increasing level of technology and the diverse ways in which criminals are now able to infiltrate the bank accounts of individuals and to defraud unsuspecting bank customers, a new survey has shown that more than half of bank customers in Nigeria have been victims of fraud, particularly via the various digital banking platforms.

The 2022 Consumer Digital Banking Satisfaction Index, a survey conducted by Agusto & Co, just released showed that 59 percent of bank customers who participated in the survey have been fraud victims on the digital platforms of their respective banks. As part of cost cutting measures and to increase ease of banking, commercial banks have invested more in digital platforms.

These platforms range from USSD, to banking applications, and internet banking. Bank customers’ response to the survey, showed that 41 per cent of respondents have not have not been defrauded while 59 per cent have been victims of fraud in different forms.

Many of the respondents who responded said they experienced more fraud perpetrated via phishing email and text messages. Data showed that 14 per cent of respondents have been victims of fraud through phishing emails and text messages. Also, 11 per cent of respondents said they had become victims of fraud through data breach via downloaded applications such as free virtual private network (VPN), while another 11 per cent said they became victims through unauthorised access to bank account via USSD.

In the same manner, 10 per cent of the respondents said they had been defrauded though the unauthorized access to account due to wrong disclosure of their bank verification number, while nine per cent said they experienced fraud in the banking industry though unauthorized access to account due to disclosure of ATM card pin.

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Due to the number of customers who have at one time or the other experienced fraud on the various digital baking platforms, analysts at Agusto & Co say the survey “suggests that more investments in cyber protection by Banks is required to combat the growing exposure to cyber security risks on digital platforms.”

While a large percentage of the survey respondents expressed satisfaction with the level of security provided on their banks’ digital platforms, some cited delay in time out of digital app after long period of activity, access of two-factor authentication and notification not sent when the platform is accessed as areas that needs to be worked on.

Based on the digital banking satisfaction index’s parameters, Access Bank Plc recorded the highest user experience score of 94.6 underpinned by comparably higher estimated transaction success rates, ease of navigation, and awareness and active usage of services provided.

United Bank for Africa Plc (UBA) scored the second highest (94.4) while Guaranty Trust Bank Limited (GTBank) was third with a user experience score of 91.4. Perceived security strength, range of platforms known, and ease of navigation on the platforms were strong ranking factors amongst respondents

In line with its level of awareness, USSD banking applications are widely used across the coverage banks, as Access Bank recorded the highest usage of its USSD code *901# with 53 per cent of the bank’s respondents citing the platform as their most frequently used for digital banking transactions.

Analysts at Agusto & Co said they believe the level of usage recorded is supported by the Access Winfest Campaign launched in October which plans to reward customers up to N1 billion in cash and other items for carrying out transactions using the USSD code or accessMore app.

Zenith Bank Plc recorded the highest percentage of respondents who perceive their bank’s respective digital platforms to be secure. UBA and Access Bank were the second and third highest respectively. First Bank Nigeria Limited (FirstBank) and Standard Chartered Bank Nigeria Limited (StanChart) had the lowest excellent ratings with only 39 and 54 per cent of the banks’ customers in our survey being satisfied with the level of security on their frequently patronized digital platforms.

The respondents cited history of security breaches, receipt of phishing emails and text messages and notification not sent on time when the platform is accessed as reasons for the low ratings. Most of the coverage banks had over 70 per cent of their respondents alluding to transactions rates above 70 per cent.

However, respondents of Keystone Bank, Polaris Bank, First Bank, FCMB and StanChart Bank disclosed transaction success rates of below 70 per cent. Approximately 70 per cent of the survey respondents indicated that they are not willing to switch to another bank’s digital platform.

This is less than the 82 per cent of respondents recorded in our 2021 survey. Customers cited pain points to be high service fees, poor customer service, frequent downtime on the digital platform and as the main reasons they were willing to make a switch to another bank’s digital banking platform