Combatting Fraudulent Activities: Wema Bank Terminates Partnerships with Three Fintech Firms, Suspends Four Others

In an effort to combat rising cases of fraudulent transactions, Wema Bank, a leading commercial financial institution in Nigeria, has discontinued partnerships with three fintech firms and suspended four others. The move, according to the bank, is to safeguard customers' interests and maintain ethical standards.

Over the past year, Wema Bank faced significant financial challenges, reporting a substantial loss of approximately ₦685 million (around $595,000) due to fraudulent activities such as fraud and forgery. In response to these incidents and to safeguard its customers' interests, the bank launched a robust anti-fraud campaign.

The campaign was prompted by a noticeable increase in fraudulent transfers detected in certain wallet accounts operated by Wema Bank's fintech partners through third-party wallet accounts provided by the bank.

Following an extensive investigation, Wema Bank identified the fintech entities responsible for the fraudulent activities. In addition to discontinuing collaboration, the bank has initiated stringent audits and examinations of the operational procedures of its fintech partners to ensure alignment with ethical standards and regulatory requirements.

Wema Bank's approach underscores its commitment to ethical partnerships, regulatory compliance, and adherence to the Central Bank of Nigeria's Know-Your-Customer (KYC) policies.

Central to the anti-fraud campaign is an emphasis on customer awareness and education regarding fraudulent schemes that could compromise their bank accounts. The initiative aims to empower customers with knowledge to detect and prevent fraud, equipping them to safeguard their financial assets effectively.

According to Oluwole Esomojumi, Chief Audit Executive at Wema Bank, customer education is paramount in combating increasingly sophisticated fraud tactics, ensuring customers are equipped to recognize and counteract potential threats.

“We’re consistently ahead of the curve, which is evidenced by our thorough investigations into our fintech partners. Those found to be engaged in fraudulent practices have been disconnected from our payment gateway,” Oluwole remarked.

The bank has also reportedly stepped up its security monitoring procedures, with a firm resolve to eliminate any fraudulent activities.

Last year, Wema Bank suffered a substantial loss of ₦685 million due to fraudulent incidents and forgery. Notably, another major bank, Access Bank, incurred a much higher loss of ₦6.15 billion over the same period.

Amid these rising concerns, Wema Bank is tightening its control of fintech ventures. Meanwhile, electronic payment transactions in Nigeria had a significant increase in the first quarter of 2024. Nigeria Inter-Bank Settlement Systems (NIBSS) reported an 89% rise in e-transactions, totalling ₦234 trillion in Q1 2024. This growth was consistent from month to month.

Mobile money operators (MMOs) in Nigeria, notably OPay and PalmPay, saw a huge increase in transaction volumes, reaching ₦17.2 trillion in the first quarter of 2024. This encouraging trend in digital transactions emphasises the significance of strong security measures to secure the financial environment.