ABSTRACT
This research work aims at
determining the role of information and communication technology in detecting
fraud in the Nigerian banking system. The banking institution which has
integrity and trust as its hallmark has been exposed to various forms of fraud
and various means employed in defrauding banks. Fraud derails the society’s
integrity and value among the committee of nations and in effect, affects the
level of trust. The banking sector has been the cornerstone of economic and
financial mainstay of any nation, hence the need for study of the role and the
effectiveness of information and communication technology in fraud detection in
the banking industry. First Bank of Nigeria Pie, Enugu metropolis was used as a case study.
The research work treated the causes of fraud in Nigerian banks, forms of bank frauds,
Effects and consequences of fraud in first bank of Nigeria plc, the information
and communication technology and fraud detection in banks and Fraud control
measures in banks.
The methodology adopted in this study is the survey research
design%. There were interactions with bank staff of various cadres with
structured questionnaire to know their own opinion. 400 questionnaires were
administered of which 320 were duly completed and returned. Some of the findings
from the research work reveal that lack of staff motivation has an effect on
the incidence of fraud in Nigerian banks. It also reveals that the introduction
of ICT into the banking industry has reduced the incidence of fraud in Nigerian
banks. Further findings reveal that the Nigerian banking laws are not adequate
for fraud control in banks.
Based on the findings of this
study, recommendations made are the adoption of computer aids as tool for fraud
prevention and control; banks should employ highly sophisticated security
gadgets in their banks, like surveillance TV systems, on —the-spot photographing
of customers etc. Proper reviewing of laws relating to fraud should be
encouraged and stern penalties that commensurate with any offence committed
should be embarked on.
CONTENTS
Title page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Contents
vi
List of Tables ix
TABLE OF CONTENTS
CHAPTER ONE:
INTRODUCTION
1.1 Background of Study 1
1.2 Statement of the Problem 4
1.3 Research Questions 6
1.4 Objectives of the Study 6
1.5 Research Hypothesis 7
1.6 Scope of the Study 7
1.7 Limitations of the Study 8
1.8 Significance of the Study 8
1.9 Overview of First Bank of Nigeria Plc 9
1.10 Definition of Terms 12
References 13
CHAPTER TWO
2.1 Literature Review 14
2.2 History of Information and Communication Technology . 15
2.2.1 Information and Communication Technology 17
2.3 Organization of the Bank 19
2.4 Definition of Fraud 21
2.5 Forms of Fraud 26
2.5.1 Other Types of Fraud 31
2.6 Causes of Fraud 32
2.6.1 Causes of Bank Fraud 33
2.6.2 Methods of Fraud Perpetration 38
2.7 Extent of Fraud In Banks 39
2.8 The Effects of Fraud in First Bank Of Nigeria 41
2.8.1 Implications of Fraud 42
2.9 .ICT and Fraud Detection 44
2.9.1 Achievement of ICT in Fraud Detection In Banks 46
2.9.2 Shortcomings of ICT in Fraud Detection In Banks 47
2.10 Fraud Control Measures in Banks 48
2.10.lOther Control Measures
54
References 55
CHAPTER THREE RESEARCH METHODOLOGY
3.1 Research Design 58
3.2 Sources of Data 59
3.3 Population of Study
61
3.4 Sample Size and Its Determination 61
3.5 Method of Data Collection 63
3.6 Reliability of Data 63
3.7 Validity of Data Collected 64
3.8 Method of Data Analysis 64
References 65
CHAPTER FOUR
4.1 Presentation and Interpretation of Data 67
4.2 Hypothesis Testing 74
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Findings 83
5.2 Recommendations 84
5.3 Conclusion 86
Appendices 88
Bibliography 92
LIST OF TABLES
Table 4.2.1: The introduction of ICT into the banking industry had reduced the Incidence of fraud in First Bank of Nigeria Plc.
Table 4.2.2: Lack of staff motivation gives rise to fraud in
First Bank of Nigeria
Table 4.2.3: The Nigerian banking laws are not adequate for
fraud control in banks
Table 4.2.4: Poor salaries and inadequate working conditions
induce bank staff to commit fraud.
Table 4.2.5: Inadequate fraud detection system in operation
in banks causes frequent Fraud.
Table 4.2.6: Information and communication technology is
effective in the detection of fraud in Nigerian banks.
Table 4.2.7: Information and communication technology ensures
that proper book of account are maintained in Nigerian banks.
Table 4.2.8: Information and communication technology
minimizes financial anomalies in Nigerian banks.
Table 4.3.1 : Contingency table 1
Table 4.3.2 : Contingency table 2
Table 4.3.3 : Contingency table 3
CHAPTER ONE
1.1 BACKGROUND OF STUDY
Historically, fraud has always
existed with the nature and life of mankind. There is a general consensus
amongst criminologist that fraud is caused by the elements called “WOE”- Will, Opportunity and Exit. i.e., the will to commit the fraud
by the individual the opportunity to execute the fraud and the exit which is
the escape from the sanctions against successful or attempted fraud.
Fraud is a global phenomenon. It is
not unique in any sector of the economy or peculiar to Nigeria. The
level of fraud in the present day Nigeria has assumed an epidemic
dimension. It has eaten deep into every aspect of our life to the extent that a
three year old child talks about yahoo mail or 419, newly discovered sobriquet
for advanced free fraud that is hunting us as a nation. Nigeria, with
all of its natural and human resources, tethers on the brink of destruction
because of fraud. Much of what we do is “cutting leaves” instead of dealing
with the root problem. Generally, fraud takes its root from the human heart. It
is an axiom that the heart is deceitful above all things and is desperately
wicked.
Fraud is the number one enemy of the
business world, no company is immune to it and it is in all works of life, it
is becoming predominant in the banking industry, as banks are now persistent
targets of frauds. Nwankwo (1991) said that there is no where fraud is more
serious than in banking. It is the biggest cause of bank failure. The fear is
now rife that the increasing wave of fraud in the financial institutions in
recent years, if not arrested might pose certain threats to stability and the
survival of individual financial institution and the performance of the
industry as a whole and no area of the economy is immune from fraudsters and
even the banking system. Fraud if not checked might cause run on in the banking
sector.
Fraud together with its sister
white-collar crimes which came into being later in the 19th and 20th century
inter alia corruption, money laundering, tax evasion, externalization of
foreign currency to itemize just a few have stood as potent weapons capable of
hemorrhaging the entire world economies particularly the banking sector because
of its high risk factor.
Since fraud is carried out over a
period of time, a minor one at the initial stage snowballs into a sizeable one
over a period of time. However, the incidence of fraud has become a nightmare
to the bankers who are particularly concerned, not only because it is on the
increase, but also it acquires sophistication and tries outwitting every new
technology. In the past years, cases of frauds in banks have been on the
increase with each year recording staggering figures, even though most of the
reported cases are essentially different types of fraud, An example is
defrauding a bank using a genuine account of an employee who is the defrauder.
Another one is through the use
of fictitious account; also, fraud is carried out with the aid of an employee’s
friend. Similarly this unhoiy act is sometimes done using an account of a third
party that depends on an employee-insider to perpetrate the cnrne.
Fraud is a universal phenomenon which
has been in existence for so long. Its magnitude cannot the security team
designed to prevent it. Its management has become a central point in banking
like the management of risk because of the above fadts. Fraud and its
management have been the precipitating factor in the distress of banks, and as
much as various measures have been taken to minimize the incidence of fraud, it
still rises by the day because fraudsters always device tactical ways of committing
fraud. This has become a point of great attention in the banking sector as well
as every organization in Nigeria.
Technology is invented by man to
manipulate his social and physical environments. The sociology of science and
technology made us to understand that, technology came with both manifest and
latent intents. The manipulation of computer and other information and
communication technology (ICT) to detect fraud in banks gives more insight into
the manifest function of technological revolution. When computer was invented,
the intention of its inventors is to hasten data processing with effortless
ease. That it has been doing efficiently by giving timely and accurate
information. The ability of computer to control manipulations,
frauds, and forgeries continue to
give the banking system the urge to upgrade their information communication
technology (ICT) department. If not for the introduction of information
communication technology system in Nigeria,
fraud could have defeated the Nigeria
banking industry. In this view, despite the introduction of the first banking
ordinance in 1952 and central bank act in 1958 including acts and ordinance
with the amendments over the years to control and regulate the activities of
the banks, fraud rather increased in size and the techniques gained more
sophistication.
The introductions of modern banking methods like automatic electronic gadgets; communication systems and computers; fraud has a watchdog to check its excesses. Due to forg