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ABSTRACT
The main purpose of this study is to examine the electronic banking and fraud control in Nigeria deposit bank. To achieve the objectives of the study, the researcher took extensive review on related literature, and utilized the Bourley and Yaro-Yemen’s sampling technique to determine the sample size. Out of which a sample size of 119 respondents from the population of 170 respondents in four (4) Banks of Nigeria (Eco Bank Nigeria Plc, First Bank Nigeria Plc, Zennith Bank Nigeria Plc, and FCMB). Out of the 119 copies of questionnaire distribution 100 were retrieved. Simple percentage and frequency distribution tables were used to analyze the data. The research hypothesis was formulated and tested, using the Pearson Product Correlation Coefficient statistical tool. It was found among others that there are areas that fraud exit in bank organization. One Time Passwords is the measure to prevent fraud. Hardware Tokens is the measure to prevent fraud. Smart Cards and USB Tokens, OTP by SMS, and Transaction Monitoring are measured to prevent fraud. Banks try to make their sites secured by implementing latest network security software. Based on the findings, the research recommends that; Banks management should design One Time Passwords to their customer web page to prevent fraud. Banks should release these tools such as Smart Cards and USB Tokens, OTP by SMS, and Transaction Monitoring are measured to prevent fraud. Banks should make their sites secured by implementing latest network security software. Banks should protect their customer personal information to avoid identity theft from happening to customers by using strategies measures. Such measures is One Time Password. Bank Management should trained their employee on the adequate strategic assessment, risk analysis and security to implementing new e-banking applications or software.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The fast advancement of global information infrastructure during the last decades, including information technology and electronic banking networks (Electronic/Internet and telecommunications systems) has enabled the development of electronic commerce at a global level, allowing business to effectively interact more with their customers and other corporations inside and outside their industries. E-commerce integrates communications, data management and security services, so that business applications would provide rapid and flexible exchange of information, for the purpose of serving customers and attaining firm’s competitive advantage Post & Anderson (2006).
The banking industry, like many business sectors, utilized information and communication technology (ICT) to offer its customers value added services and convenience. The electronic banking system facilitated the interaction between customers and banks for the purpose of facilitating many services for bank customers. The previously mentioned system is called “electronic banking”, “Virtual banking” or “Online banking”. With many labels reported in the literature, they are all denoting the utilization of ICT to conduct banking transactions. E-banking includes the provision of various banking activities conducted virtually from anyplace, at any time outside the physical premises of banks (Clark , 1999). However, this changing financial landscape, from traditional banking to electronic banking, has brought with it new challenges. Such challenges are not only related to bank management, but also to national and international regularity and supervisory authorities. The major challenges stem from the increased cross-border transactions, and from the reliance on technology to provide banking services with the necessary security from a remote location through the Electronic/Internet. These challenges include regularity challenges, legal challenges, operational challenges, reputational challenges, inconvenience challenges and security challenges. Obtaining safe and secure environment of electronic banking technology is the most important concern for all financial service organizations (Boateng & Molla 2006). Security of online banking transactions is one of the most important challenges to the banking sector. Billions of financial data transactions are conducted online every day, and bank cyber-crimes take place every day by skilled criminal hackers through manipulating the bank’s online information system (Boateng 2006). Threats can come from inside or outside the system, which threatens customers’ information and transactions, where bank administrators must ensure that banks have the appropriate practices in place to guarantee the confidentiality of customers’ data, as well as the integrity of the e-banking system and the transactions conducted Peter & Sylvia (2008).
Banks have traditionally been in the forefront of adapting technology to improve their products and services (Aladwani 2001).The Banking industry of the 21st century operates in a complex and competitive environment characterized by these changing conditions and highly unpredictable economic climate. Information and Communication Technology (ICT) is at the centre of this global change curve of Electronic Banking System in Africa today (O’Brien 2002).
Fraud has for a long time now remained the cancer-warm that is biting hard on the back bone of banking industry. The effect of this phenomenon has led to the liquidation of many banks in Nigeria. It has been the major cause of the ugly development in our Banking industry now refereed to as ‘Distress’
The development which records high occurrence of our banks has caused a big question mark on the credibility of Nigerian in both with and outside the country. The need to combat the double –headed monster by all means gave rise to the issue of cultiviatism of the banking industry especially in the areas susceptible to fraud (Gold 2007).
The state of the banks services to customers are such that customers are made to stay helplessly on the counter for hours, only to be attended to by neatly dressed impolite bank cashier. The security checks are simply cumbersome and bank staff wishing to stay on their employment vigorously follow these procedures (Anamuah-Mensah & Marfo 2009).
Then bank manager and the staff seem not to bother as they profiled form chars queues generate. It created in them an area of self importance and a customer who is time conscious will have to see him/her in his/her company officer for behind the counter deal.
However, there is no doubt that the fear of fraud slaved down bank services and has militated against performing any feast in the art of quick and excellent quality service.
The experience of the banks is that any money that goes out by mistake does not come back and there are many people who are prepared to rob the bank through fraud. But electronic banking has helped a lot in the detection and it prevention in banking industry (Amanfo, 2010).
Based on personal experience and views of others on the role of electronic banking in fraud detection and prevention in banking industry in Nigeria, the researcher was motivated to evaluate the role of electronic banking in fraud detection and prevention in banking services. A case study of first bank of Nigeria Plc Enugu main branch.
1.2 STATEMENT OF PROBLEMS
One main advancement technology has brought to us is the introduction of electronic banking or E-banking. Traditional banking is characterized by physical decentralization, with branches scattered around populated areas to give customers easy geographical access (Ainin et al., 2005). E- Banking does away with the need for most visits to the bank. However, according to Locket & Littler (1997), physical banks assure customers that their banks has substantial resource and guarantee the security of their savings. A study indicated that although electronic banking has been available in the UK since the early 1980s, it is still at an embryonic stage. It is not clear whether all customers want or are comfortable with electronic banking (Daniel & Storey, 1997). Technology is changing at a rapid pace making it difficult for both the customer and the bank to determine the best approach. Particular problems arise with trying to integrate new channels with legacy channels. It is for these reasons that academic research is needed in this newly emerging delivery channel (Daniel & Storey, 1997).
Similarly, in Nigeria, most banks practicing E-banking are also facing challenges such as customer preference of the E-banking facility, convenience of clients to utilize and adopt E-banking facilities. The low level of the performance of the Nigerian banking industry is due to an array of problems, one of which is the issue of fraud which is one of the most intractable and monumental problem facing the industry.
The problem of accountability is traceable to the root cause of fraud which results from poor record keeping misappropriation forging, poor internal control, excess power given to the executive or management etc. Many people has been manipulating money and embezzlement of fund in Business organization as in first deposit banks. Observation also shows that people prefer manipulated money to their main salary which lead to the liquidation of the organization. In the light of the above, this study therefore is set to determine the extent of electronic banking in fraud control in Nigerian deposit bank and its influence on business organization as well as ascertaining the benefits and problems arising from such practice
1.3 OBJECTIVE OF THE STUDY
The objective of this study is to examine electronic banking and fraud control in Nigerian deposit banks. Other specific objective includes;
- To find out the role of electronics banking in fraud detection.
- To determine how electronics banking can be used to prevent fraud.
- To identify the causes of fraud.
- Suggesting measures of preventing fraud.
- To ascertain the consequences of fraud in business organization.
- To make recommendation based on the findings.
1.4 RESEARCH QUESTIONS
To guide the study, the following research questions were raised.
- Has your bank ever experienced fraudulent act?
- Since your bank commenced the electronic banking system, has there been any fraudulent experienced?
- If there is, has your management introduced any prevention mechanism?
- Do you think electronic banking fraud can have any influence in your operation?
- Are the bankers fully trained in computer operation?
- In which area of your services does the fraud exist?
- What control mechanism is introduced in your banking organization?
1.5 HYPOTHESIS
HO: Electronic banking system does not control fraud in banking operation.
1.6 SIGNIFICANCE OF THE STUDY
The significance of this study lies on the great importance attached to the electronic banking in business organization from the findings of this research. People will know the importance of electronic banking in fraud control.
This work is significant in the sense that it will be an eye opener to the public at large. Another significance is that people will know that there is no means of manipulation of fraud where electronic banking is installed. Interested organization, business centers, institution and many others having known the role of electronic banking will make use of electronic banking in their organization for them to curb this fast growing problem.
It will help the organization to know when their money is embezzled.
1.7 SCOPE OF THE STUDY
The content scope looks at electronic banking and fraud control in Nigerian deposit bank. The geographical scope of the study is survey of selected bank in Nigeria).
1.8 LIMITATION OF THE STUDY
This study is hindered by the following: Time, Finance and Materials.
The time expected to complete this study is too short. Also the finance estimated to carryout the study is not enough.
Finally, the materials needed to carryout the study are limited. All this make it difficult for the research to be carried and in-depth research on the study.
1.9 DEFINITION OF TERMS
These are the definitions of terms used in the study.
Electronic Banking: E-banking is defined as the automated delivery of new and traditional banking products and services directly to customers through electronic, interactive communication channels.
CRIME: Crime is any act of commission or omission believed to be socially harmful to a group and thus forbidden by the designated authority of that group under threat of punishment states another way or a specific element or act of human behaviour which vary in time and place which is considered repayment or harmful enough to be forbidden by the group and this subject to a penalty.
FRAUD: Criminal deception or act of manipulation of fund by criminal act.
PREVENTION: Serving or designed to prevent, precautionary.
THIEF: Person who steal, especially secretly and without violence