Dimensions of Electronic Fraud and Governance of Trust in Nigeria’s Cashless Ecosystem

• Author: Oluwatosin Adeniyi,Oludayo Tade
• DOI: 10.1177/0306624X20928028
• Date: 01 December 2020
• Published date: 01 December 2020
• Subject Matter: Articles

Article

Dimensions of Electronic

Fraud and Governance of

Trust in Nigeria’s Cashless

Ecosystem

Oludayo Tade

1

and

Oluwatosin Adeniyi

1

Abstract

A negative outcome of the nascent cashless policy in Nigeria has been persistent

electronic banking fraud (e-fraud). Fraud occurrence in any financial space indicates

insecurity and loopholes being exploited by fraudsters. This underscores the impor-

tance of trust governance in electronic banking and its centrality in a transiting

cashless economy like Nigeria. Against this background, we investigated e-banking

fraud and the role trust governance plays in both the adoption and refusal to migrate

and use electronic banking in Nigeria. Using qualitative methods (in-depth and key

informant interviews) of data collection, 30 participants were purposively selected

and in some instances reached through the snowball and referral methods. Findings

showed internal, external, and collaborative dimensions of e-fraud. Experiences of

fraud reportedly affected adoption and migration of bank customers to e-banking

platforms. Although weak governance mechanism was reported, banks nonetheless

are embracing security mechanisms such as sending SCAM alert messages to cus-

tomers, while shaming and sack of compromised staff were employed as within-bank

measures to secure the confidence of customers in the evolving financial ecosystem.

Keywords

financial inclusion, electronic fraud, cashless ecosystem, cybersecurity, Nigeria

1

University of Ibadan, Nigeria

Corresponding Author:

Oludayo Tade, Department of Sociology, Faculty of Social Sciences, University of Ibadan, Ibadan 200284,

Nigeria.

Email: dotad2003@yahoo.com

International Journal of

Offender Therapy and

Comparative Criminology

2020, Vol. 64(16) 1717–1740

!The Author(s) 2020

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0306624X20928028

journals.sagepub.com/home/ijo

Introduction

Since July 1, 2014, when cashless policy became fully operational in Nigeria, a

major downside of its introduction has been pervasive electronic banking fraud

(e-fraud). Cashless policy encourages electronic transactions with a view to

reducing the quantum of physical cash in the economy and thereby minimizing

the risk of cash-related crimes. Although the policy is to foster transparency,

curb corruption/leakages, and drive f‌inancial inclusion, the growing perpetra-

tion of fraud nonetheless threatens the cashless ecosystem. This has implications

not only for the adoption of e-banking as a secured platform by the banked but

is also a major threat to efforts made to capture the unbanked populace. While

banking fraud appears to have heightened in the wake of the introduction of

electronic payments, the history of fraud in Nigeria as well as other parts of the

world is long. In other words, fraudulent people abound everywhere and Nigeria

is not an exception. To underscore the ubiquity of fraud, Cross (2019) exten-

sively reports fraud incidences from the United Kingdom, the United States,

Australia, Canada, and Hong Kong with attendant losses in millions of dollars.

Ibrahim (2016) offers a telling sense of the historicity of fraud within the

Nigerian context. According to this author, colonial records clearly indicate

that “schoolboys” had mastered the art of counterfeiting a broad spectrum of

things ranging from off‌icial letters to people’s signatures (identity theft). These

Wayo trickers, as they were then referred to, had developed capacities to act as

impostors of gold and diamond merchants. The discovery of oil and its com-

mercial exploitation in post-independence Nigeria provided unprecedented

impetus for the proliferation of fraudulent practices as the economy was

awash with petrodollars (Adogame, 2009) which was seen as part of a national

cake to be shared. Glut in the global oil markets in the beginning of the 1980s

implied sharp reductions in revenues to the government and the entry of the

Bretton Woods institutions (particularly the International Monetary Fund

[IMF]) into the socio-economic sphere in Nigeria via austerity measures. This

reform encapsulated a wide array of interventions in the economic life of the

country. It is noted that advance fee fraud (“419”) phenomenon emerged strong-

ly in this milieu. The unrealistic expectations during the oil boom years dove-

tailed into unmet aspirations in the oil bust years producing a large army of

disgruntled and jobless citizenry who became vulnerable to becoming fraudu-

lent. In addition to these, Ampratwum (2009) listed a host of other contempo-

rary dimensions of fraud in Nigeria to include credit card fraud, false identity

fraud, forgery, and immigration fraud, among others. Therefore, it is doubtless

from the foregoing that fraud in Nigeria predates the introduction of electronic

payments or internet-enabled transactions which lie at the core of cashless

policy. However, the scale of fraud has been accentuated by technological devel-

opments and newer vintage fraud typologies are emerging which call for an

1718 International Journal of Offender Therapy and Comparative Criminology 64(16)