….Integrity, not technology, may be banks’ biggest defence against fraud

By Eyitayo Quadri

Nigerian banks are investing heavily in technology to combat fraud, but a senior banking risk executive says stronger systems will not be enough if people with authorised access can bypass them.

Eyitayo Quadri, Chief Risk Officer at Union Bank of Nigeria, argues that the biggest threat to financial institutions can come from inside their own organisations, particularly when senior employees are able to override controls.

His warning comes as Nigeria continues to deal with significant losses from digital-payment fraud, even though reported losses fell sharply in 2025.

Data presented by the Nigeria Inter-Bank Settlement System (NIBSS) showed that digital-payment fraud losses rose from about ₦17.67bn in 2023 to ₦52.26bn in 2024. NIBSS later said losses fell to ₦25.85bn in 2025.

The 2024 increase was heavily influenced by a single incident involving about ₦31.1bn, according to NIBSS. That makes the headline figure important, but it also shows why fraud statistics need to be examined beyond the total amount lost.

The risk behind the numbers

Quadri’s central argument is that fraud cannot be treated solely as a technological problem.

“The largest risks a financial institution faces are rarely the ones on the spreadsheet.”

He argues that weak judgement, conflicts of interest and the willingness of powerful individuals to circumvent controls can expose institutions even when sophisticated systems are in place.

This is consistent with international fraud research.

The Association of Certified Fraud Examiners’ 2024 Report to the Nations examined 1,921 occupational fraud cases across 138 countries and territories. It estimated that organisations lose about 5% of their revenue to fraud each year.

The study also found that tips were the most common way fraud was detected, accounting for 43% of cases. More than half of those tips came from employees.

That finding matters for banks because employees often have access that outsiders do not.

A fraudster outside a bank may need to deceive an employee or customer before reaching an account. An insider may already possess the permissions, information or system access needed to cause damage.

Nigeria’s insider-fraud problem

Nigeria’s banking regulators have repeatedly raised concerns about insider abuse.

In 2024, the Nigeria Deposit Insurance Corporation said insider abuses and financial malpractice remained major threats to the stability of banks. The corporation also worked with law-enforcement agencies on investigations involving bank directors, managers and staff.

The NDIC’s 2024 quarterly report also recorded attempted fraud and forgery by staff of four deposit money banks involving significant sums, although it said there was no actual loss in those cases.

There is a wider lesson here.

The existence of a control does not mean the control will work. It depends on who operates it, who monitors it and whether senior employees can circumvent it without consequences.

As Quadri puts it:

“The danger is greatest precisely in the corridors of power, where those who hold the keys can also switch off the alarm.”

That is an argument about governance as much as fraud prevention.

When controls can be overridden

Banks operate under multiple layers of controls. These include operational checks, risk and compliance functions, internal audit, board oversight and regulatory supervision.

The widely used Three Lines Model is designed to separate these responsibilities and provide independent challenge and assurance. The model gives operational management responsibility for managing risk, while specialist risk functions provide oversight and internal audit provides independent assurance.

The weakness emerges when the people responsible for making decisions can also neutralise the mechanisms designed to challenge them.

Quadri therefore argues that institutions need more than written policies.

“Controls without character are only paperwork; character without controls is only luck.”

The point is particularly relevant in banking, where employees routinely handle other people’s money and sensitive financial information.

Trust is the real currency

The financial consequences of fraud can be measured in naira.

The cost of losing customers’ confidence is harder to calculate.

Quadri cites Warren Buffett’s well-known warning:

“It takes 20 years to build a reputation and five minutes to ruin it.”

The broader evidence suggests that trust can recover, but rebuilding it takes time.

The 2026 Edelman Trust Barometer puts global trust in financial services at 63%, while banking recorded a 65% trust score. Edelman says financial services trust has risen by 10 percentage points over five years.

But the figures should not be interpreted as evidence that banks have solved the trust problem.

The same survey describes a broader global environment in which trust is becoming more fragmented and people are increasingly retreating towards familiar groups and institutions.

For Nigerian banks, that creates a difficult balancing act: they need customers to trust increasingly digital systems while also convincing those customers that the people operating those systems can be trusted.

Technology cannot replace accountability

Nigeria’s fraud environment is changing rapidly.

Digital banking, instant transfers and fintech services have made financial transactions faster and more convenient. They have also created more channels through which criminals can attack the financial system.

NIBSS said social engineering remains a major fraud technique and identified insider abuse as a significant threat. It also said fraud reporting remains important because non-reporting can allow individuals implicated in fraud to move between institutions.

This makes employee monitoring, whistleblowing and information-sharing important parts of fraud prevention.

It also raises a difficult question for bank boards and regulators: what happens when the person creating the risk is senior enough to influence the people responsible for challenging them?

Technology may detect unusual transactions, but governance determines whether warnings are acted upon.

The whistleblower may be more valuable than another algorithm

The ACFE findings provide an important counterweight to the technology-heavy response to fraud.

Tips detected 43% of the occupational fraud cases in its study, making employee reporting the most common detection method.

That suggests banks need environments where employees can report suspicious behaviour without fear of retaliation.

The Nigerian financial system already has whistleblowing mechanisms. The NDIC, for example, provides channels for reporting financial malpractice, fraud, corruption, diversion of funds and other misconduct.

But the existence of a reporting channel is not the same as having an effective whistleblowing culture.

Employees need to believe that complaints will be investigated independently and that reporting misconduct will not endanger their careers.

The lesson from a biblical story

Quadri uses the biblical story of the widow whose deceased husband’s debt threatened to leave her sons in bondage to illustrate his argument.

In the story, the widow appeals to the reputation of her late husband, whom she describes as a man of integrity. The prophet Elisha then helps her turn the small amount of oil she possesses into enough resources to settle the debt and support her family.

Quadri interprets the story as a lesson about reputation as an economic asset.

“The only collateral that widow could offer was her husband’s integrity, and it proved to be the one asset the creditor could not seize.”

The religious interpretation is Quadri’s own. But his broader point about reputation has a clear business implication: trust can influence whether customers, investors, employees and counterparties continue to deal with an institution after something goes wrong.

What should banks do?

Banks need controls that are independent enough to challenge senior management, boards willing to investigate uncomfortable warnings and incentive structures that do not reward employees for achieving results at any cost.

The Three Lines Model is designed partly for this purpose. Its effectiveness, however, depends on clear responsibilities and genuine independence between operational management, risk oversight and internal audit.

Quadri’s prescription is therefore cultural as well as institutional.

“The work of risk management is to make integrity institutional: to build systems that make the honest choice the path of least resistance, and that keep working long after any one person has gone.”

That distinction matters.

A bank that depends entirely on the personal morality of individual employees remains vulnerable when those employees leave, change roles or acquire greater power.

A bank with strong governance can continue to function even when individuals fail.

What this means for customers

For bank customers, the issue is not an abstract debate about corporate ethics.

Fraud can mean lost savings, frozen accounts, compromised personal information and months of uncertainty while disputes are investigated.

Customers also ultimately bear some of the wider costs of fraud through investment in security systems, compliance and controls.

For banks, the stakes are larger still. Repeated failures can attract regulatory action, litigation and reputational damage.

And for regulators, the challenge is to ensure that institutions do not merely report fraud after it occurs but can demonstrate that their systems are capable of detecting and preventing it.

Quadri’s argument ultimately comes down to a simple proposition:

“We are not guarding balances, we are guarding lives.”

That may sound like a moral argument, but in banking it also has a practical meaning.

A financial institution’s most important safeguards are not only the software, policies and audit procedures recorded in its risk framework. They are the people willing to challenge wrongdoing and the governance structures strong enough to protect them when they do.

The next test is whether banks can turn that principle into measurable practice — particularly when the person being challenged sits at the top of the organisation.

Fidelity Bank Plc has reported a 37.9% increase in gross earnings for the first quarter of 2026, posting N434.95 billion as the lender expanded its market share and strengthened its balance sheet.

The bank’s unaudited financial results for the three months ended March 31, 2026, filed with the Nigerian Exchange (NGX), showed gross earnings rose from N315.42 billion recorded in the corresponding period of 2025.

The performance was largely driven by growth in interest income, which climbed 22.8% to N314.48 billion from N256.10 billion a year earlier.

The lender also reported a profit before tax of N92.48 billion, while profit after tax stood at N74.47 billion. Earnings per share closed at N5.69, reflecting continued returns for shareholders.

Assets Cross N11 Trillion Mark

Fidelity Bank’s balance sheet expanded significantly during the quarter, with total assets rising to N11.35 trillion by March 2026 from N10.46 trillion in December 2025.

Customer deposits also increased from N6.89 trillion to N7.38 trillion, highlighting what analysts describe as sustained customer confidence and stronger liquidity positioning.

Shareholders’ funds grew by 27.5% to N1.39 trillion, up from N1.09 trillion at the end of 2025, supported by retained earnings and improved profitability.

Financial analysts say the results underscore the resilience of Nigeria’s banking sector despite inflationary pressures, currency volatility, and tighter regulatory conditions.

Why the Results Matter

The latest earnings come months after Fidelity Bank completed its recapitalisation exercise, helping it exceed the Central Bank of Nigeria’s minimum capital requirement for international commercial banks.

The bank said its eligible capital rose to N561 billion in 2025, above the regulatory benchmark of N500 billion.

Its Capital Adequacy Ratio also strengthened to 30.94% by December 2025, compared with 23.47% a year earlier.

Strong 2025 Performance Continues Into 2026

Fidelity Bank had already posted strong full-year results for 2025, with gross earnings rising 45.6% to N1.52 trillion from N1.04 trillion in 2024.

Interest income increased to N1.11 trillion, while fees and commission income rose 44.7% to N113.4 billion.

Net profit after tax for the 2025 financial year stood at N242.4 billion.

Despite broader growth, the bank’s net loans and advances dipped slightly by 2.4% to N4.28 trillion in 2025, which the lender attributed to customers paying down matured obligations.

Managing Director Speaks on Growth Strategy

Managing Director and Chief Executive Officer of Fidelity Bank, Nneka Onyeali-Ikpe, said the bank’s first-quarter results reflected the strength of its long-term strategy.

“We are on a stronger footing and confident that we will set new growth records that are reflective of our legacy and the future we are working on,” Onyeali-Ikpe said.

She added that the successful recapitalisation programme had positioned the bank for a “new era of growth and impressive returns”.

Industry Reactions

Banking analysts say the lender’s ability to grow deposits and earnings simultaneously signals improving operational efficiency and customer retention.

The results also come as Nigerian banks continue adjusting to higher interest rates, foreign exchange reforms, and evolving regulatory demands.

Market observers note that investors are closely monitoring banking stocks for signs of sustainable earnings growth amid broader economic uncertainty.

What’s Next for Fidelity Bank?

Analysts expect the bank to focus on:

Expanding digital banking services

Growing retail and SME lending

Strengthening regional operations

Improving non-interest income streams

Sustaining shareholder returns

The bank’s performance in subsequent quarters will likely be watched closely by investors assessing the long-term impact of recapitalisation across Nigeria’s banking industry.

Amaka Onwughalu, Chairman of Fidelity Bank Plc, has won the “Women on Bank Boards” category at the Africa Women in Banking and Finance Conference and Awards 2026.

The award was presented during the AWBFA 2026 conference held at the Lagos Marriott Hotel Ikeja on Friday, 8 May 2026.

Organisers said the event, themed “Redefining Women’s Leadership in African Finance,” was created to celebrate women shaping Africa’s banking and financial services industry while encouraging greater inclusion in leadership positions.

The recognition places a spotlight on growing conversations around gender diversity, corporate governance, and leadership representation within Nigeria’s banking sector and across Africa.

Why the Award Matters

Speaking through Ezinwa Unuigboje, Onwughalu described the recognition as an important reminder of the role inclusion plays in strengthening corporate governance.

“This recognition matters because inclusion at board level strengthens governance,” she said.

She added that when diverse perspectives are represented at board level, “oversight is sharper, risk conversations are richer, and strategy is tested more thoroughly.”

The Fidelity Bank chairman also argued that inclusive leadership sends a strong signal to both the market and younger professionals aspiring to leadership positions.

“Boardrooms should reflect competence, experience, and the society the financial system serves.”

Industry analysts say diversity at board level has increasingly become a governance benchmark for investors, regulators, and financial institutions seeking stronger accountability and broader decision-making perspectives.

Focus on Governance and Banking Growth

Onwughalu linked the award to Fidelity Bank’s governance priorities and ongoing expansion plans.

According to her, strong governance remains central to the bank’s progress in capital strengthening, international expansion, and business growth.

She said inclusive boards help financial institutions remain responsive to customers, communities, and changing regulatory expectations.

“The honour is accepted with gratitude, and with renewed commitment to champion inclusive leadership at the highest level.”

The recognition comes at a time when banks across Africa are facing growing pressure to improve governance standards, increase representation, and strengthen institutional trust.

Industry Push for More Women in Finance Leadership

Organisers described AWBFA 2026 as more than an awards platform, calling it a movement aimed at strengthening leadership pipelines for women in African finance.

Advocates for gender inclusion in banking argue that increased representation of women at executive and board levels could improve institutional resilience, innovation, and customer engagement.

Several Nigerian financial institutions have also stepped up diversity and leadership initiatives in recent years as regulators and investors pay closer attention to environmental, social, and governance (ESG) standards.

What Happens Next?

Industry observers say recognitions such as the AWBFA awards may encourage more African financial institutions to prioritise inclusive leadership and mentorship opportunities for women.

For Fidelity Bank, the award could further strengthen its reputation among investors and stakeholders focused on governance and leadership standards.

As conversations around diversity and board representation continue globally, experts say African banks are increasingly being measured not only by profitability but also by governance quality and institutional inclusiveness.