Comparative Analysis of Financial Fraud Techniques in Nigeria: Assessing the Prevalence and Impact of Expert-Based Hacking and Social Engineering Strategies

This study presents a comprehensive empirical analysis of financial fraud techniques in Nigeria, a representative case of underdeveloped countries grappling with evolving cybercriminal threats. It focuses on two dominant fraudulent methodologies: expert-based hacking—which exploits systemic and infrastructural vulnerabilities using technical means such as brute force attacks and cryptanalysis—and social engineering, which manipulates human psychology to extract sensitive financial data or deceive victims into self-compromise. To achieve a balanced perspective, the study adopts a mixed-methods research design that integrates both quantitative and qualitative approaches. Quantitative data were collected via a structured survey administered to 2,000 respondents, comprising victims, financial institution personnel, law enforcement officers, and regulatory officials across Nigeria’s six geopolitical zones. Qualitative insights were gleaned from semi-structured interviews with cybersecurity experts and financial crime regulators.Analysis reveals that social engineering accounts for nearly 80% of reported financial crimes, with platforms such as Facebook and LinkedIn serving as key enablers for identity fraud and phishing schemes. In contrast, expert-based hacking appears less frequently acknowledged among respondents, possibly due to its covert nature. Notably, the study identifies the use of “layering”—a method of obscuring illicit fund origins through digital wallets and multiple transaction paths—as a common mechanism that supports both fraud strategies. Statistical methods, including two-way ANOVA, were employed to compare the relative impact and prevalence of these tactics, uncovering significant regional and demographic variations. Thematic analysis of interviews further uncovers limitations in current regulatory and detection frameworks, particularly the overreliance on reactive, rather than proactive, security protocols.The findings underscore an urgent need for targeted countermeasures, such as public awareness campaigns, adaptive regulatory policies, strengthened digital forensic capabilities, and international cooperation frameworks. This study offers crucial guidance for cybersecurity practitioners, financial institutions, and policy architects seeking to fortify Nigeria’s—and by extension, other developing nations’—resilience against the multifaceted threats of financial fraud.