Digital payment fraud drops by 51% as Nigerian fintechs fight with AI – CBN report

3:47 AM. Lagos.

Somewhere in a server room, an algorithm just blocked its 10,000th fraudulent transaction of the night. No human saw it happen. No customer knows their account was targeted. No headline will celebrate the money that didn’t get stolen.

This is the war nobody talks about.

While Nigeria’s fintech sector celebrates 11 billion transactions and pioneering innovation, behind the scenes, nearly every company is waging the same exhausting battle. They are fighting fraud sophisticated enough to threaten the entire ecosystem.

And they’re fighting it with artificial intelligence, not because it’s trendy, but because nothing else works.

9 out of 10 fintech companies are using AI for one thing

The Central Bank of Nigeria’s first fintech ecosystem report asked companies how they’re using artificial intelligence. The results reveal an industry laser-focused on survival:

87.5% of Nigerian fintechs use AI primarily for fraud detection.

AI Use Case	% Using
Fraud Detection	87.5%
Chatbots/Customer Service	62.5%
Credit Scoring/Risk Modelling	37.5%
Customer Onboarding/KYC	37.5%

Notice the gap. Fraud detection dominates by a massive margin. It’s not even close.

This isn’t the sexy AI story the tech world loves to tell…of chatbots delighting customers or algorithms predicting perfect credit scores. This is defensive AI. Survival AI. The kind that runs 24/7 in the background, quietly protecting the entire ecosystem from collapse.

The enemy is sophisticated and often not even Nigerian

Here are the fraud patterns Nigerian fintechs fight every single day:

• Account takeover attacks: Criminals buy stolen credentials on the dark web, take over legitimate accounts, and drain them before the owner notices.
• Synthetic identity fraud: Using real ID numbers combined with fake information to create accounts that look legitimate but are designed to disappear after one large transaction.
• Money laundering networks: Splitting large sums into thousands of small transactions that slip under detection thresholds.
• Cross-border scam rings: International criminal networks that route operations through Nigeria to exploit the country’s reputation, even when the actual perpetrators are based in Europe, Asia, or North America.

The CBN report notes what many in the industry already know: much of the digital fraud attributed to Nigeria is actually orchestrated by foreign actors using Nigeria as a proxy. Recent law enforcement operations have shown cross-border networks deliberately blaming Nigeria for crimes planned and executed elsewhere.

But Nigeria bears the reputational cost. And Nigerian fintech platforms pay the price, literally.

The hidden tax on innovation

Here’s the number that should alarm everyone: 87.5% of fintech executives say compliance costs significantly impact their capacity to innovate.

Translation: the money spent fighting fraud is money that could have gone toward:

→ Building features customers actually want

→ Reaching excluded rural populations

→ Hiring engineers to improve user experience

→ Expanding to other African markets

→ Lowering fees for customers

The reality revealed in the data is stark: companies are spending more on fraud detection than on product development. Brilliant engineers who could be building the next big thing are instead writing algorithms to catch criminals. It’s necessary, but it’s exhausting, and it’s invisible to everyone outside the industry.

But here’s the thing, it’s working.

Buried in the report is a statistic that deserves more attention:

Digital payment fraud losses dropped 51% in recent years.

Read that again. While fraud attempts are becoming more sophisticated, actual successful fraud has been cut in half.

This didn’t happen by accident. It happened because Nigerian fintech entities invested heavily in AI-powered detection systems that:

→ Analyse transaction patterns in real-time

→ Flag suspicious behaviour before money moves

→ Learn from every attack to prevent the next one

→ Share intelligence across platforms

The AI is winning. But it’s expensive. And it’s invisible to everyone outside the industry.

The twin obstacles: Talent and regulation

When asked what prevents them from scaling AI innovation, fintech entities pointed to two equally critical gaps:

Lack of Technical Talent	37.5%
Regulatory Clarity	37.5%

The talent problem is straightforward. Nigeria doesn’t have enough AI/ML engineers trained specifically in financial fraud detection. Universities aren’t teaching it. Bootcamps don’t cover it. Companies have to build expertise from scratch, learning on the job through trial and error with millions of naira at stake.

They’re training themselves while fighting a live war.

The regulatory clarity problem is more complex. Fintech platforms want to deploy more AI but don’t know which rules apply:

→ Can they use AI to make credit decisions? Under what constraints?

→ How much data can they collect for fraud prevention?

→ Who’s liable if an AI falsely blocks a legitimate transaction?

→ What happens if an algorithm discriminates unintentionally?

Without clear answers, companies default to caution, which slows innovation.

The CBN survey asked fintech players what would help them adopt and scale responsible AI. The answers reveal an industry ready to collaborate:

Type of Support Needed	% Wanting
Access to high-quality data or infrastructure	50%
Peer collaboration and knowledge sharing	25%
Pilot partnerships with regulators	12.5%
Access to training or capacity building	12.5%

Notice what’s NOT on this list. Requests for less regulation or looser oversight. The industry isn’t asking to be left alone. They’re asking for infrastructure, clarity, and collaboration.

When asked about priorities for AI deployment, 75% of fintech platforms cited two concerns equally:

Ethical and transparent use of AI in credit/risk decisions	75%
Fair and inclusive access to AI tools and data	75%

This matters. Nigerian fintech companies aren’t just racing to deploy AI faster than competitors. They’re asking: how do we make sure our algorithms don’t discriminate? How do we ensure transparency in credit decisions?

How do we build AI that serves everyone, not just the wealthy?

Read also: “Verification compliance is not an obstacle” – CBN tells innovators at Nigeria Fintech Week

And they want to test these questions in regulatory sandboxes. 62.5% expressed a strong interest in participating in AI-focused pilot programmes with the Central Bank.

Olayemi Cardoso, CBN governor

Besides that, here’s the fundamental injustice:

Nigerian fintech entities have cut fraud losses in half through sophisticated AI deployment. They spend more on compliance and fraud prevention than on product development. They’ve built detection systems sophisticated enough to catch attacks that originate from other continents.

Yet when people think ‘Nigerian fintech,’ they still think ‘scam.’

The invisible war is being won. But wars fought in server rooms don’t make headlines. Algorithms that catch fraud before it happens don’t go viral. AI systems that protect millions of customers every day don’t get celebrated.

The industry is fighting for Nigeria’s reputation, while still carrying the burden of that reputation.

3:47 AM. The next day.

The algorithm has blocked another 10,000 fraudulent transactions. It’s learning from yesterday’s attacks. Getting smarter. Getting faster.

Somewhere, a data scientist is reviewing the overnight logs. Somewhere, an engineer is fine-tuning detection thresholds. Somewhere, a fraud analyst is tracing a new attack pattern back to its source, which might be Lagos or London or anywhere in between.

This is Nigerian fintech’s invisible war. Not the story the world tells, but the one the industry lives every single day.

And they’re winning it, one blocked transaction at a time.

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