AN EXAMINATION OF E-BANKING FRAUD PREVENTION AND DETECTION IN NIGERIAN BANKS

ABSTRACT
E-banking offers a number of advantages to financial institutions, including convenience in terms of time and money. However, criminal activities in the information age have changed the way banking operations are performed. This has made e-banking an area of interest. The growth of cybercrime – particularly hacking, identity theft, phishing, Trojans, service denial attacks and account takeover– has created several challenges for financial institutions, especially regarding how they protect their assets and prevent their customers from becoming victims of cyber fraud. These criminal activities have remained prevalent due to certain features of cyber, such as the borderless nature of the internet and the continuous growth of the computer networks. Following these identified challenges for financial institutions, this study examines e-banking fraud prevention and detection in the Nigerian banking sector; particularly the current nature, impacts, contributing factors, and prevention and detection mechanisms of e-banking fraud in Nigerian banking institutions.
This study adopts mixed research methods with the aid of descriptive and inferential analysis, which comprised exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) for the quantitative data analysis, whilst thematic analysis was used for the qualitative data analysis. The theoretical framework was informed by Routine Activity Theory (RAT) and Fraud Management Lifecycle Theory (FMLT).

The findings show that the factors contributing to the increase in e-banking fraud in Nigeria include ineffective banking operations, internal control issues, lack of customer awareness and bank staff training and education, inadequate infrastructure, presence of sophisticated technological tools in the hands of fraudsters, negligence of banks’ customers concerning their e-banking account devices, lack of compliance with the banking rules and regulations, and ineffective legal procedure and law enforcement. In addition, the enforcement of rules and regulations in relation to the prosecution of financial fraudsters has been passive in Nigeria. Moreover, the findings also show that the activities of each stage of fraud management lifecycle theory are interdependent and have a collective and considerable influence on combating e-banking fraud. The results of the findings confirm that routine activity theory is a real -world theoretical framework while applied to e-banking fraud. Also, from the analysis of the findings, this research offers a new model for e-banking fraud prevention and detection within the Nigerian banking sector. This new model confirms that to have perfect prevention and detection of e-banking fraud there must be presence of technological mechanisms, fraud monitoring, effective internal controls, customer complaints, whistle-blowing, surveillance mechanisms, staff-customer awareness and education, legal and judicial controls, institutional synergy mechanisms of in the banking systems. Finally, the findings from the analyses of this study have some significant implications; not only for academic researchers or scholars and accounting practitioners, but also for policymakers in the financial institutions and anti-fraud agencies in both the private and public sectors.

CHAPTER ONE: INTRODUCTION
1.0 Introduction
With the global use of progressively more sophisticated internet and information technology (Papazoglou, 2003), electronic banking is developing as a key channel for banking businesses (Wei et al., 2012). Globally, remote banking is regarded as a characteristic of the new economy, which involves electronic transactions between banks and their customers (Banstola, 2007). Electronic banking, generally referred to as e-banking, is the latest delivery channel for the banking system (Keivani et al., 2012). The term “e-banking” has been discussed in several ways by many researchers from diverse backgrounds, mostly because electronic banking involves quite a lot of banking activities through which customers can inquire for financial information and implement transactions by means of a digital television, telephone, mobile phone or computer (Hoehle, Scornavacca & Huff, 2012). Perkins and Annan (2013) describe electronic banking as the rendering of services and dissemination of information by banks to customers through various delivery channels that can be accessed with a personal computer or other electronic devices.

However, the banking sector is being reformed by globalization, innovation, customer needs and competition. Due to the development of a knowledge-built economy and the emergence of the latest information and communication technology, financial institutions particularly the banking industries have experienced thought-provoking changes during the last decade. According to the Wisdom (2012), Information and Communication Technology, the most significant factor in the forthcoming development of the banking industry, enhances banks’ ability to produce sophisticated products, to have superior market structures, to diversify their markets and to expand globally. Furthermore, Darlington (1999) states that over the past three decades, customers’ needs have changed


significantly: customers are demanding simplicity in their daily banking services together with maximum security and safety.

Thus, the traditional banking system, which consists of physical branches, is now being threatened by information and communication technologies characterized by automated systems of interaction with customers (mobile banking, call centres, automated teller machines (ATMs), online banking), that include relatively minimal costs and permit customers to select from the alternative delivery channels (Keivani et al., 2012). Therefore, electronic banking has become a great business; the transformation from traditional banking to electronic banking has been a “Leap” change (Yazdanifard, WanYusoff, Behora, & Abu, 2011; Wang & Huang, 2011).

Globally, the electronic banking system addresses several emerging trends: it is very convenient and easy for electronic banking users to manage and access their bank accounts at any time and from anywhere in the world (Brar, Sharma & Khurmi, 2012). The banking sector has been strengthened by this development in recent years, since electronic banking saves vast amounts of resources in areas such as investments into ATMs, staff training, opening of branches and other operational costs (Chaturvedi & Meena, 2016). The internet has improved users’ experience of electronic banking operations dramatically (Abu-Shanab & Matalqa, 2015). Banking transactions can now be performed any place, anytime in the world through any bank delivery channel: ATMs, POS, Smart TV, personal computers, telephones are among the channels a customer might consider (Hoehle, Scornavacca & Huff, 2012).


E-banking is the significant application of the internet for banking activities, and bank sectors have upgraded their business strategies with the assistance of the internet. Banks have provided their services via the internet and thereby electronic transactions have increased speed in the banking industry worldwide (Mahdi, Rezaul & Rahman, 2010). The advancement of electronic transactions gives a tremendous prospect for benefits to consumers and financial institutions (Singh & Singh, 2015).

Corroborating this, the emergent modern technologies have resulted to significant transformation of banking approaches and techniques. Bank branches have started to lose ground to computer-generated banking as the use of distant banking services has been augmented (Hoehle, Scornavacca & Huff, 2012). Globalization, transforming social trends, competition and particularly information and communication technology advancements have brought intense reform of the banking system (Loonam & O’Loughlin, 2008). Generally, information infrastructure is considered worldwide as an opportunity for introducing innovative electronic distribution channels for bank products and services.

In contrast, fraudulent electronic activities are increasing and becoming sophisticated, severely threatening and menacing the trust and security of electronic banking services (Mahdi, Rezaul & Rahman, 2010). E-banking fraud has turned into a thoughtful and serious phenomenon to the financial fraud and crime management in the banking industry across the entire globe (Rajdeepa & Nandhitha, 2015). These current electronic fraud opportunities are often tremendously difficult to mitigate due to their technological complexity; hence, banks may devote substantial resources endeavouring to prevent and detect them (Kranacher, Riley & Wells, 2011). Banks encounter challenges in preventing and detecting fraud, and these challenges can often be aggravated by the organizational frameworks, political frameworks, regulatory frameworks and newly invented technology approaches that are in place. Nevertheless, even the issuing of momentous regulatory frameworks and the regulatory supports of a given economy or nation cannot be predicted to eliminate or minimize the occurrence of fraud in the banking sector (Hoffman, 2002). However, in the very beginning of electronic banking systems, the scale of fraud was very insignificant because the banking industry was one of the most strictly regulated sectors, which treats prevention of fraud as a duty (Mahdi, Rezaul & Rahman, 2010; Shannak, 2013).

On the contrary, banking represents the mediator of the economy; fraudulent acts have brought enormous losses that are affecting all the performing activities (Sahin &Duman, 2010). Equally, banking development, from traditional banking to electronic banking, is.....

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Item Type: Ph.D Material  |  Attribute: 331 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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