The Central Bank of Nigeria has said it is taking steps to protect banks from Internet frauds and other cybercrimes. Delivering a keynote address at the first annual Conference on Audit and Regulatory Examination of Banking Technologies recently in Lagos, CBN’s Director, Banking Supervision, Mrs. Olatokunbo Martins, expressed great displeasure at the rate of global cyber espionage and its attendant loss.
She said the figures involved in global cybercrimes were ‘quite alarming’, adding that each technology adopted by a bank presented unique risks that raised safety and soundness concern.
As such, Martins said there was the need to ensure the safety and soundness of the banking industry amid rising cyber threat to the industry.
She said, “In banks, you employ so many technology-driven products and the banks embrace new financial, operational and compliance risk as you adopt these new technologies.
“As you are aware, very soon, we won’t just be requiring you to make capital charge for your credit, you will also be required to make capital credit for your operational risks. IT risk is a major operational risk.
“Currently, you will say that the major risk comes from credit, but some will also tell you that a significant part of credit risk is operational. If you say that operational risk is a failure of people, processes and system, even the credit risk, a major part of it is interwoven with credit risk.”
According to her, the banking industry should be Basel 11 compliant by 2014 and this will bring about improved capital buffers while protecting the banks and making them more resilient.
She said, “Today, information technology has evidently impacted banking tremendously, even redefining the nature of banking and banking relationships. Banks are truly enjoying all the technological novelties with potential for expanding their products, services, customer base and responding to regulation, and above all, improve their profitability.
“However, it is important not to lose sight of the fact that technology comes with great risk. Technology poses risk to the safety and soundness of financial institutions, to the public interest and to the larger economy.”
Speaking in the same vein, the Chairman, Audit Committee Institute, Nigeria, Mr. Christian Ekeigwe, warned that with the nature of cybercrime, a single incident could pull down a strong bank.
He added that it could happen within a short time.
He advised banks to adopt a new mindset on control in order to ensure that their institutions were not affected.
“This conference will focus attention on the key issues of banking technology risks, how auditors must audit them to assurance and the proposition that technology risks contributed, insidiously, to the distress in the industry,” Ekeigwe added.
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