THE ROLE OF COMPUTERS IN FRAUD DETECTION AND PREVENTION IN THE NIGERIA BANKING INDUSTRY

ABSTRACT

In this study, the research set out to examine the roles of the electronic Computers in fraud detection in banks. 51 staff of UBA plc is randomly selected as the study sample for the research. These 51 staff was issued with 51 copies of structured questionnaires to complete their responses to the questionnaire were analyzed using percentage and chi-square test. Based on the analyses, the researcher discovered the following facts and findings:-

i.                          The computer had contributed immensely to the development of Nigeria banking industry some of the recent developments in computer technology that had made positive impact in the Nigeria banking industry include the following the automatic document processor; magnetic ink character recognition, optical character recognition; automated teller machine; electronic find transfer; and electronic fund transfer at the point of sale.

ii.                         The electronic computers are used by the Nigeria banks to detail fraudulent activities. Such as teaming and lading; foreign exchange fraud; forged bank document and so on.

iii.                The computers sometimes income errors whiles doing the work of fraud direction in banks.

iv.                The electronic Computers had revolutionalised the banking industry, since they (the computer) quicker the banking processes; reduces job / work stress; and brought professionalism in banks.

The researcher also made the following recommendations.        

(a)             That all banks and other financial institutes in Nigeria (including the Community banks and finance companies) should computerize all their operations.

(b)             That the Computers to be used by the bank and other financial institutions in Nigeria should have an in- built fraud detection devices.

(c)             That the federal government should subsidize the cost of electronic computer so as to make affordable by some banks that have how asset 1 capital base e.g. the community banks.

TABLE OF CONTENT

CHAPTER ONE

1.1              Statement of the problem and objective of the study.

1.2              Rationale of the study                                               

1.3              Significance of the study                                                       

1.4              Background of the study                                                       

1.5              Definition of technical terms.                                    

CHAPTER TWO

2.0              Literature Review                                                      

2.1       Theoretical Review                                                    

2.2              Empirical Review                                                                   

CHAPTER THREE

3.1              Research Hypothesis                                                  

3.2              Research methodology                                                          

3.3              Sources of data.                                                                                 

3.4              Limitations of the study                                                        

CHAPTER FOUR

4.1              Presentation of Data                                                  

4.2              Analysis of data                                                         

4.3              Discussion of the Results                                           

CHAPTER FIVE

5.1              Summary                                                                    

5.2              Conclusion                                                                             

5.3              Recommendation                                                                   

Bibliography                                                              

CHAPTER ONE

INTRODUCTION

1.1              PROBLEM IDENTIFICATION

Banks in Nigeria have been for quite some times the centre of public attention especially in the area of fraud. Fraud here been on the increase recent years. Although, fraud in the bank is a global phenomenon, the growth in Nigeria had become out-standing.

In view of this fraudulent practice, computer should use to detect and prevent fraud in the banking industries.

This study is therefore:-

(1)               To highlight the types of bank fraud.

(2)               To find out the possible way of detecting the fraud in the bank by the use of computer.

(3)               To find way of preventing of such fraud by the computer.

1.2       RATIONAL OF STUDY

The function of the commercial banks is the extension of credit to the Banking Industries. They are rendering a great social service through their investment actions are expanded and a high standard e.g. living is realized. The role of computers in fraud octoroon and prevention in the Nigeria Banking industry is very important to the economy because it aids increased finance of the economy.

It is pentiment to research into the role of this fraud in banking industries and suggest possible means of mitigating them.

1.3       SIGNIFICANCE OF THE STUDY

1.                  As the topic implies, laid on the problem of fraud in which finally results in distressed banks. Significantly the study exposed us to the fact that even computers can do better than human being when it comes to detection of fraud.

2.                  The study will help the banker to be more prudent in their dealing with the money deposited by their customers.

3.                  The study will also be of immense help to others willing to carry out further research ch in in this area.

4.                  More over, the introduction of computer in the banking industries, will help to discourage those who have the intention of involving in fraudulent act.

5.                  The study will also benefit to banker and public as it enlightens them on the fraud in banking industries.

6.                  The study also in partial fulfillment of the award of Higher National Diploma in Banking and Finance.

1.4              BANK GROUND OF THE STUDY

I got much interest on this topic because of the fact that support motto of the banking sector prudence and honesty has been, to a large extent not up hold Today in banking sector, I find fraudulent workers, customers and so, forth. These fraudulent practice end up making there banks distressed. No where is fraud more serious then in banking it is there to biggest single cause of bank failures. The magnitude of fraud is of course, not known because such of it is undiscovered and undetected and not all that is detected is published.

More over, there fraudulent acts may not be successfully detected with the aid for workers since some of those workers indulged in these fraudatera not to disclose information that will held to detect the fraud But with the banker to detect out the fraud, by so doing it will also help the banker to prevent fraud in the banking industries.

But today computer has provide solutions to problems in all sphere, being a handy tool for accomplishing most tasks        quickly and easily move with the introduction of computer it has improved communication system and automotive electronic gadgets into the banking system coupled with the various precautionary measured taken by banks to prevent frauds in the banking system. Fraud have rather taken inclear dimension and the size and sum involved increased in geometric progression OLALEYE AMUPITAN (1981).

In his article “obstacles to growth of banking system saw that it was discovered during investigation that it was discovered during investigation that it was discovered during investigation that banks now take extra precaution before clearing a cheque because of rampant incidence of fraud and forgery, which banks loss placed on the exchange of N1.5 million per each working day, while ADEGBITES. (1996), in his own article the cash economy phenomenon “also observed that fraud has became sophistication as to make a forged cheque look good as in the original specimen.

            Banks in a bid to reduce the size and rapidity to the occurrence of fraud in their banks now take adequare precautionary measure by providing computer machine to clear cheques drawn on their customers accounts.

FEMI ADEKAYE (1998), also in his article said that customers waste a minimum of about two hours in the banking hall of Nigeria banks to cash their own money. The checking process is long and by the time a cheque is cleared for the cashier to pay the customer is frustrated and perhaps fast asleep. But with aid of computer all these problems has come to an end.

COMPUTER AS A POWERFUL AND VERSATILE MECHINE.

            It has a memory that enables it to recall past events and instructions.

It can store large volumes of data and information.

It can perform complex calculations to very high degrees of accuracy.

It is generally very fast since it has very few moving parts.

As a result of all these I considered it worth while to involves the use of computer in the detection and prevention of frauds in Nigeria banking industry.   

1.5       DEFINITION OF TERMS

Computer is a machine that accepts data, processes the data and provides the result as information in the required from provided that appropriate data is fed, into it. Essentially, computer is designed to perform their three logic operation Viz; acceptance of data (input) processing of data result production (out-put).

Fraud means receiving illegally in order to make money or obtain goods. It can also be defined as a conscious or deliberate effort aimed at obtaining unlawful financial advantage at the detriment of another person. This lettered word “FRAUD” has been the Smanor cause of the ugly development in our banks now, in the name of “DISTRIES” “DISTRESS”.

                        Software is defined as data, programmes, not formerly part of a computer but used for its operation, it means anything that is not hardware such as programmes language manual and documentation is also refers as structural instruction resident in the computer which enable it to execute as a physical devices that makes up the specific operation. Hardware: is defined as a physical devices that makes up the computer system. Central processing unit. Is the brain/heart of the computer, it is the controlling centre of the entire data processing systems.

KEY BOARD. Is defined as input through which data and, intruction are fed and received