KCB Group fired 60 employees last year as it stepped up its war on fraud, with the staff linked to schemes targeting the lender and its customers.
The lender had parted ways with 34 employees in 2024 for similar reasons.
KCB disclosed that it wrote off Sh760,000 due to fraud and forgeries last year, compared with Sh4.5 million in 2024, according to its latest sustainability report.
The bank recorded 201 fraud incidents last year and thwarted attempts valued at Sh141.1 million.
The number of fraud incidents was higher in 2024 at 339, with the value of blocked attempts standing at Sh212.9 million.
Commercial banks have invested heavily in technology to detect and prevent fraud, which exposes them not only to financial losses but also reputational damage in a sector heavily reliant on trust.
‘We have implemented advanced security measures, including biometric authentication, document verification, selfie matching, and enhanced digital onboarding processes,’ KCB said in its sustainability report.
‘Real-time monitoring of digital transactions further enhances fraud detection and mitigation.’
KCB Kenya blocked fraud worth Sh100.8 million last year, while its Rwanda operation prevented losses of Sh40.3 million.
Kenya accounted for 50 of the 60 employees dismissed, with 188 of the fraud attempts reported in the country. Rwanda had the second-highest number of attempts at seven.
Five employees were dismissed in Rwanda, followed by Tanzania and South Sudan with two each and Uganda with one.
Insider risk
Staff involvement in fraud remains a major headache for banks, with some lenders resorting to ethics audits to root out misconduct.
Last year, Equity Group sacked about 2,000 employees following an ethics audit that flagged suspicious transactions between staff and customers.
The investigation focused on employees who received money from customers or other entities linked to the bank, including colleagues, through their salary accounts at Equity or their registered M-Pesa numbers.
‘Fraud losses declined materially over the past three years, a reflection of the maturity of our digital control environment,’ Equity said in its annual report.
The lender did not disclose the value of fraud cases blocked or losses incurred in its reports.
Banks have increasingly invested in technology, including artificial intelligence tools, to guard against threats from both staff and outsiders.
Earlier this year, Equity’s management disclosed that its systems had detected and blocked a major fraud incident in Rwanda estimated at Sh430 million.
‘As I said 98.2 percent of our transactions are on the internet. That is the risk. There is nobody who can go to the road to drive and say they will never have an accident. So, what I need to do is to up the game of my staff and as you saw, all the transactions were reversed because it was detected immediately,’ Equity Group chief executive James Mwangi said after the Rwanda incident.
Digital threat
Digital fraud has become a major concern in the financial sector as fraudsters seek to exploit the increased uptake of branchless transactions.
Commercial banks have been forced to take insurance cover and hold provisions against fraud, underlining how the risk is hurting their businesses beyond actual losses incurred when fraudsters succeed.
‘The significant losses recorded during the year were financial crime risk related due to mobile, cards (debit and credit) and internet banking external fraud events,’ said Standard Chartered Bank Kenya.
The bank said it had invested in fraud risk management systems such as ThreatMetrix (TMX), a digital fraud detection and prevention tool, and other automated solutions to help curb the menace.
‘Fraud (particularly phishing) remains an area of concern. The bank has deployed several automated solutions to detect incidences of fraud resulting in a significant drop in the number of fraud incidences,’ Standard Chartered added.