A few days ago, I met up with a friend, and in our usual exchange of greetings, we asked about each other's day. To my surprise, he mentioned having a rough day, leaving me curious to hear more.

What happened? I replied.

He said his bank gave him a deep shock in his life. I was thinking is the naira scarcity everybody is currently facing (banks paying only a limited amount of money)

Not that, but a fraudulent attempt.

His bank account that he has been using for over 12 years has a different face and signature but with the same name and account number. Because of this, the banker told him that he could not access his cash or make any transaction with the account, claiming that the account didn't belong to him.

After much argument, he had to rush to his house to check for past retailers and other proof of transactions he had made with the account. Luckily for him, he found a few of them, including his old checkbook and the share he bought from the bank.

He thought presenting the documents would prove his ownership of the account. However, upon returning to the bank, they still denied him access, stating that sharing the same name with the account wasn't sufficient proof, as there were others with the same name, making the documents insufficient for justification.

At this point, he was confused and decided to meet random people to seek a solution. Luckily he stumbled on a lady who had the same issue, and she directed him to the Central Bank of Nigeria (CBN) office. He ended up moving from one office to another and I saw the stress on his face.

Long story short, he finally got his account restored with his face and signature.

What if he had decided to forfeit the account and one day the Economic and Financial Crimes Commission (EFCC) approached to accuse him of criminal activity via his account?

According to PUNCH, "In 2018, over 25,043 bank customers and depositors lost N1. 9bn to cyber fraud, with fraud incidents rising by 55 percent from the previous year's 17,600. Nigeria's Consumer Awareness and Financial Enlightenment Initiative had projected a $6tn loss by 2030 to cybercrime within and outside Nigeria".

If this is the case then what could be the remedy? The answer lies within the blockchain technology.

In this post, we will explore five areas blockchain technology enhances security in the banking sector.

1. Immutable Ledger:

Blockchain's decentralized and tamper-resistant ledger ensures that once a transaction is recorded, it cannot be altered or deleted. This immutability provides a transparent and auditable history of financial transactions, reducing the risk of fraudulent activities.

2. Smart Contracts:

The use of smart contracts in blockchain technology enables the creation of self-executing contracts with predefined rules. In the banking sector, this can automate processes, ensuring that transactions adhere to agreed-upon terms and conditions, reducing the potential for fraud or unauthorized activities.

3. Decentralization and Distributed Consensus:

Traditional banking systems often have a single point of failure, making them susceptible to hacking and fraud. Blockchain's decentralized nature and consensus mechanisms distribute control across the network, making it more resistant to attacks and unauthorized access.

4. Identity Management:

Blockchain offers enhanced identity management through cryptographic techniques. By providing secure and decentralized identity verification, it becomes more challenging for criminals to engage in identity theft or impersonation, thus safeguarding against fraudulent access to financial services.

5. Real-time Monitoring and Transparency:

Blockchain facilitates real-time monitoring of transactions, enabling quicker detection of unusual patterns or suspicious activities. The transparent nature of the blockchain allows for improved oversight by regulatory bodies and financial institutions, creating an additional layer of security against fraudulent behavior in the banking sector.

In conclusion, blockchain technology stands as a formidable safeguard against fraudulent activities in the banking sector. Its immutable ledger, smart contract capabilities, decentralized structure, robust identity management, and real-time monitoring collectively contribute to creating a more secure and transparent financial ecosystem. By leveraging these features, the banking industry can fortify its defenses, mitigate risks, and enhance trust among stakeholders, ultimately paving the way for a more resilient and secure financial landscape.