Nigeria’s Fintech Growth Threatened By Security Risks, Experts Warn

Despite its rapid expansion and role in driving financial inclusion, Nigeria’s fintech sector faces major security threats, including cybercrime, money laundering, and regulatory loopholes, according to a new report by Nextier SPD.

The report, authored by Dr. Chibuike Njoku and Dr. Ndu Nwokolo, highlights how Nigeria’s booming fintech industry with startups growing from 144 in 2021 to over 217 in 2024 has also become a target for criminals.

One of the key aspect is Cybercrime and Fraud. In 2023, hackers stole over ₦5 billion from three Nigerian financial institutions, while total fraud-related losses in 2024 hit ₦52.26 billion.

Moreso, despite a CBN ban, digital currencies remain popular, with 33.4 million Nigerians investing in crypto in just six months. FIRS has sued Binance for $79.5 billion over alleged tax evasion.

Also, criminals use POS machines linked to fintech banks to wipe victims’ accounts instantly. ₦2.2 trillion in ransom payments was made in just one year.

Multiple agencies oversee fintech, creating ambiguities, weak enforcement, and compliance challenges. Nigeria’s foreign investment inflows remain low at $468 million in 2022, compared to Egypt’s $11.4 billion.

Recommendations for Stronger Fintech Security:

1. Unified Regulatory Framework: Collaboration between CBN, SEC, and NFIU to create an enforceable fintech policy.
2. Regulatory Sandbox: Testing new fintech solutions in a controlled environment before full rollout.
3. Enhanced Cybersecurity Measures: Mandatory multi-factor authentication, encryption, and real-time fraud detection.
4. Financial Cybersecurity Fusion Centre: A dedicated hub to monitor and combat fintech-related cyber threats.
5. Stronger KYC and AML Policies: Tighter identity verification and anti-money laundering regulations to curb illicit financial flows.

As fintech continues to transform Nigeria’s economy, experts stress that strengthening security and regulatory oversight is critical to ensuring its long-term sustainability and global competitiveness.