In latest months, system glitches at some main Nigerian banks have led to prospects experiencing points like incorrect financial institution deposits and unauthorised withdrawals. Along with incurring monetary losses, these glitches increase issues about how properly banks safeguard interbank settlements, particularly as transaction volumes surge.
This rise in banking glitches dangers eroding shopper belief and damaging financial institution reputations, particularly in underserved communities the place digital banking is the bridge to inclusion. If left unchecked, these failures may stall — and even reverse — progress towards the Central Financial institution of Nigeria’s purpose of 80% monetary inclusion by 2026, up from 64% in 2023.
The info
Within the first quarter of 2025, Wema, Keystone, and Union all suffered substantial glitches. These glitches resulted in unauthorised transfers totaling ₦17.3 billion ($10.7 million) from its financial institution prospects’ accounts. In October 2024, Warranty Belief Financial institution (GTB) mistakenly credited ₦1.9 billion ($1.2 million) to some prospects following a system failure.
Within the aftermath, banks have taken to suing one another in a bid to get better misplaced funds, a development that dangers straining interbank relationships and eroding public belief within the banking system.
“Glitches are system failures that disrupt the conventional stream of digital transactions,” stated Stephen, a Lagos-based mid-management stage workers at a significant financial institution who requested just for his first title for use.
A typical transaction includes transferring funds from an meant sender to its meant recipient. When a glitch happens, “cash is shipped to an unintended recipient, leading to unauthorised debits from the accounts of people who didn’t provoke the transaction,” in keeping with Stephen.
Why do glitches occur?
System upgrades in Nigerian banks usually result in glitches attributable to unrealistic deadlines set by CEOs aiming to cut back prices, in keeping with a senior data safety official at a significant Nigerian financial institution, who requested to not be named to talk freely.
“These tight schedules make it troublesome to keep away from errors and vulnerabilities, and prolonging the improve makes it dearer for them.”
In Q3 2024 and Q1 this 12 months, many Nigerian banks, together with GTB and Wema, undertook important core banking software program upgrades to modernise their operations and improve buyer experiences.
In response to Elijah Bello, a Lagos-based software program developer and cybersecurity professional, dashing system upgrades, significantly inside vital sectors like banking, is among the quickest methods to set off a significant glitch.
“Whether or not you might be altering software program or doing a significant replace, it’s nonetheless an improve,” he stated. “And normally banks are underneath strain to finish it on time, which can lead the tech staff to skip or shorten the testing part.”
Bello added that surprising behaviors happen when patches or new options go stay with out absolutely testing all edge instances.
“The banking business will usually not permit them a lot time to check attributable to their financial duties,” he stated.
A glitch turns into a gateway for hackers or IT professionals to entry accounts or features they’re not alleged to, says Stephen.
“Nigerian banks face fixed cyberattacks from exterior hackers, disgruntled former IT workers, and people with in-depth data of their core software program,” he stated. “ Whereas these makes an attempt aren’t at all times profitable, system improve urgency can create vulnerabilities, making it simpler for unauthorized entry to financial institution accounts.”
Monetary establishments reported the termination of 42 staff attributable to their involvement in fraudulent actions in Q3 2024, a 14.3% improve from the earlier quarter, in keeping with a latest report by Monetary Establishments Coaching Centre (FITC).
The FITC report additionally famous that fraud-related losses in Nigeria rose to ₦10.1 billion throughout 19,007 instances in Q3, up from ₦1.18 billion throughout 12,066 instances in the identical interval of 2023. Nevertheless, on a quarter-on-quarter foundation, the overall quantity dropped from ₦42.8 billion, suggesting some latest positive factors.
A digital cost professional who additionally requested to not be named to talk freely stated Nigerian banks’ technological vulnerabilities stem from their integrations with third-party distributors. These integrations, which have elevated considerably in recent times, are sometimes poorly executed and create issues for the banks.
One instance is the Constancy Financial institution information breach allegations in August 2024. The financial institution was fined ₦555.8 million ($346,568) by the Nigerian Knowledge Safety Fee (NDPC) for allegedly processing private information with out acquiring knowledgeable consent from information topics. The NDPC investigation revealed that Constancy relied on third-party information processors that have been additionally non-compliant with information safety laws. However the financial institution denied the allegation and disputed the effective imposed by the fee.
“Sadly, many of those third occasion integrations are poorly performed, porous, and create nightmares,” the digital cost professional added.
What ought to banks do?
To scale back glitches in Nigerian banks, specialists suggest enhancing hiring and retention methods for tech expertise, strengthening cybersecurity protocols, constructing redundancy into transaction networks, and enhancing regulatory oversight of each banks and their third-party companions.
TechCabal reported final month on the rising competitors from fintechs that has compelled banks to extend expertise spending. Six banks spent ₦268.7 billion ($171.5 million) collectively on its expertise infrastructure in 2024, a surge of 74.5% from ₦153.8 billion ($98.2 million) in 2023.
If glitches persist, prospects might migrate to extra dependable fintechs or decentralised finance (DeFi) platforms, leading to buyer attrition for banks. But when banks get it proper, prospects would regain religion in digital banking programs growing the adoption of digital and cell banking providers.
