How Fintechs Suffered Over N5bn Losses to Hackers 

Fintechs in Nigeria are experiencing significant financial losses due to hacking incidents resulting in the loss of over N5 billion by three fintechs while many others are undisclosed.

Insider connivance, involving employees of fintech companies, is suspected in several cases, making it challenging for these companies to secure their systems effectively.

However, the challenge is not peculiar to fintechs as commercial banks in Nigeria are also facing substantial financial losses due to fraud with a significant increase in insider involvement according to FITC report.

Three Nigerian fintechs have lost over N5 billion to hackers in the first 8 months of this year as cases of hacks and frauds increase within the ecosystem.

While there are many more incidences involving undisclosed amounts running into billions, it was gathered that the situation is getting more complicated as some of the heists had members of staff of the fintechs involved.

According to different sources in the industry, this has now become a major challenge for the fintech companies in Nigeria.

More worrisome for the fintechs is the fact that an attack could also come through another connected fintech, hence, a well-secured platform could get compromised through another connected platform with poor cyber security systems.

This fear recently prompted a commercial bank to disconnect many fintechs from its platform, which made it impossible for its customers to send money to the affected fintechs, although the issue was later resolved.

Sharing an experience on the prevalence of breaches in the fintech space, the Chief Executive Officer of Aladin, one of Nigeria’s digital banks, Darlington Onyeagoro, narrated how a fintech company lost N800 million to hackers in one week. But the act was not just perpetrated by outsiders, insiders’ connivance is suspected, according to him.

“We’ve seen a lot of breaches happening in the fintech space. I mean I don’t want to start mentioning So, one of my friends and also a fintech player, about two months ago lost N800 million in one week through hackers and there was a connivance.

“The issue is still with the Economic and Financial Crimes Commission (EFCC) because we feel there is an internal connivance using chargebacks for card transactions. In just one week, he lost N800 million. We have seen terrible cases,” Onyeagoro has said.

In another case of fraud involving Patricia Technologies, facts have also emerged that the stolen fund had the hands of hackers and insiders including a notable Nigerian politician who contested for House of Reps position in the last general elections.

Earlier this year, it was reported that hackers stole N2.9 billion from Flutterwave’s account. In its response to the report, Flutterwave said it noticed unusual activities in its systems and told users to activate safety protocols, but it insisted that customers did not lose any funds.

While the company denied that money was lost, the events that followed proved otherwise. Court documents that later found their way to social media showed certified true copies of a petition by Flutterwave’s legal counsel to the police dated February 20, 2023.

The letter asked for police assistance to recover funds by obtaining court orders from the magistrate court to sustain account freezes on 107 bank accounts in 27 banks that allegedly, directly or indirectly, received money from the illegal transfers from Flutterwave accounts.

Based on the FITC report, in the same period, there was also a 20.55% increase in insider involvement in the frauds committed across the bank in the second quarter of this year.

This prompted the FITC to caution the banks to be more vigilant about the type of people they employ.

“Considering the increasing instances of employees engaging in fraudulent activities, banks should exercise heightened vigilance when hiring new staff or contracting outsourcing firms for employment purposes. To prevent staff involvement in fraudulent behaviour, it is recommended to acknowledge and reward employees who have demonstrated exceptional integrity in situations where they could have acted otherwise,” FITC advised.