ROLE OF COMPUTERS IN FRAUD DETECTION AND PREVENTION IN THE NIGERIA BANKING INDUSTRY
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ROLE OF COMPUTERS IN FRAUD DETECTION AND PREVENTION IN THE NIGERIA BANKING INDUSTRY
COMPUTERS’ ROLE IN FRAUD DETECTION AND PREVENTION IN THE NIGERIA BANKING INDUSTRY
The purpose of this study was to investigate the functions of electronic computers in fraud detection in banks. The research sample of 51 UBA plc employees was chosen at random.
These 51 employees were given 51 copies of structured questionnaires to complete, and their replies were analysed using the percentage and chi-square test. The researcher uncovered the following facts and findings based on the analyses:
i. The computer has made enormous contributions to the development of the Nigeria banking business. Some recent breakthroughs in computer technology that have had a favourable impact on the Nigeria banking industry include the following.
The automatic document processor, magnetic ink character recognition, optical character recognition, the automated teller machine, electronic find transfer, and electronic fund transfer at the point of sale are all examples of electronic fund transfers.
ii. Electronic computers are employed by Nigerian banks to detail fraudulent operations. Teaming and loading; currency fraud; faked bank documents, and so on.
iii. Computers occasionally make mistakes while performing fraud detection operations in banks.
iv. Electronic computers have revolutionised the banking business since they (the computer) speed up banking operations, reduce job / work stress, and bring professionalism to banks.
The following recommendations were also given by the researcher.
(a) That all Nigerian banks and other financial institutions (including community banks and financing firms) computerise all of their operations.
(b) That the computers utilised by banks and other financial institutions in Nigeria be equipped with fraud detecting devices.
(c) That the federal government subsidise the cost of electronic computers so that they are affordable to some institutions with how asset 1 capital basis, such as community banks.
INTRODUCTION TO CHAPTER ONE
1.1 STATEMENT OF THE PROBLEM
Banks in Nigeria have long been the focus of public interest, particularly in the area of fraud. Fraud has been on the rise in recent years. Although bank fraud is a global concern, the development in Nigeria has been remarkable.
With this dishonest practise in mind, computers should be used to detect and prevent fraud in the financial industry.
As a result, this research is:
(1) To highlight the many types of bank fraud.
(2) To investigate the possibility of using a computer to detect fraud in a bank.
(3) To devise a method of preventing such computer-based fraud.
1.2 THE RATIONALE OF STUDY
Commercial banks’ primary function is to extend credit to the banking industry. They are providing a fantastic social service by expanding their investment actions and realising a high level of living, for example.
The function of computers in fraud detection and prevention in the Nigeria Banking business is critical to the economy because it aids in increasing economic finance.
It is necessary to do study into the role of this fraud in the banking industry and to propose potential mitigation measures.
1.3 THE SIGNIFCANCE OF THE STUDY
1. As the title suggests, the focus is on the problem of fraud, which ultimately leads to distressed banks. Significantly, the study revealed that even computers can outperform humans when it comes to detecting fraud.
2. The study will assist bankers in being more cautious when dealing with money deposited by their customers.
3. The study will also be extremely useful to those who wish to conduct additional research in this area.
4. Furthermore, the introduction of computers into the banking industry will serve to dissuade individuals who intend to engage in fraudulent activity.
5. The study will also benefit bankers and the general public by shedding light on fraud in the banking industry.
6. The study also counts towards the awarding of a Higher National Diploma in Banking and Finance.
1.4 STUDY BANK
I became interested in this topic since the banking sector’s main motto of caution and honesty has been largely ignored. Today, I come with fraudulent employees, clients, and so on in the banking industry. These dishonest practises result in bank distress.
Nowhere is fraud more significant than in banking, where it is the leading cause of bank failures. Of fact, the scale of fraud is unknown because much of it goes unnoticed and undetected, and not all of what is uncovered is published.
Furthermore, fraudulent actions may not be properly discovered with the assistance of workers since some of those workers involved in these fraudatera may refuse to share information that would be used to detect the fraud. However, having the banker uncover the fraud will also assist the banker prevent fraud in the financial industry.
However, today’s computer has provided solutions to problems in all spheres, being a useful tool for accomplishing most tasks quickly and easily. With the introduction of computer, it has improved communication system and automotive electronic gadgets into the banking system,
along with the various precautionary measures taken by banks to prevent frauds in the banking system. Fraud has taken on an indefinite dimension, with the size and sum involved increasing geometrically OLALEYE AMUPITAN (1981).
In his article “obstacles to the growth of the banking system,” he saw that it was discovered during investigation that it was discovered during investigation that banks now take extra precaution before clearing a cheque because of the 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 fr
Banks, in order to limit the size and speed with which fraud occurs in their institutions, now provide computer machines to clear cheques made on their clients’ accounts.
FEMI ADEKAYE (1998) stated in his essay that clients squander at least two hours in the banking halls of Nigerian banks in order to cash their own money. The checking procedure takes a long time, and by the time a cheque is approved for the cashier to pay, the customer is likely to be frustrated and fast asleep. But, thanks to the computer, all of these issues have been resolved.
COMPUTER AS A STRONG AND VERSATILE MECHANISM.
It has a memory, which allows it to recall previous occurrences and commands.
It has the capacity to store vast amounts of data and information.
It is capable of doing complex calculations with excellent precision.
Because it has few moving parts, it is generally quite fast.
As a result of all of this, I thought it was worthwhile to incorporate computers in the identification and prevention of frauds in the Nigerian banking system.
1.5 DEFINITION OF TERMS
A computer is a machine that accepts input, processes the data, and outputs the result as information in the proper format, assuming that it is fed the appropriate data. Essentially, computers are built to conduct three logic operations: data acceptance (input), data processing (output), and result creation (output).
Receiving illegally in order to make money or gain items is referred to as fraud. It can also be defined as a conscious or purposeful effort to achieve illegal financial advantage at the expense of another individual. This lettered term “FRAUD” has been the Smanor cause of the nasty development in our banks currently, in the name of “DISTRIES” and “DISTRESS”.
Software is defined as data, programmes, and documents that were not previously part of a computer but are now used for its operation. It also refers to structural instruction resident in the computer that allows it to execute as a physical device that makes up the specific operation.
Hardware is defined as the physical components that comprise a computer system. The central processing unit (CPU). Is the computer’s brain/heart; it is the command and control centre for all data processing systems.
THE KEYBOARD. Is defined as the means via which data and instructions are fed and received.
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