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Electronic Banking Fraud Prevention and Detection in Nigeria

Research’s background

Fraud is a socio-economic problem which affects the economy of both public and private sectors of the developing and developed nation globally. The Fraud has gradually started increasing in Nigeria that none of the sectors of the economy is free from fraudulent activities. The growth of electronic payment has further expanded the fraudulent activities in Nigerian banking sectors wherein BIN attack, skimming, card trapping, identity theft, malware attack are major issues (Onu, Umeakuka & Eneji, 2017). The main factor which leads to a higher rate of fraud includes the extensive growth in the field of computer technology as well as economies which support e-fraud, weaker internal control systems as well as the poor framework of the financial and regulatory body.

Nigeria is one of the fastest mobile phones using country in Africa and the third largest in the world, wherein 60% of the population are being connected. There is a higher potential for mobile commerce as compared to electronic commerce, which is gradually increasing its usability. However, the success and easy access to e-payment have led to various security issues like cybercrime, hacking, etc. (Imiefoh, 2012). The exchange in billions of sensitive information by Nigerian people each year become the major target for the hackers. The electronic business industry has never been in such a critical phase of cybercrime before. According to per the National Consumer League (2002), Nigeria was ranked third in internet money offer frauds. Regulatory authorities in Nigeria have been making efforts to curb financial fraud and clean up the banking system lately by doing their efforts, the central bank of Nigeria(CBN) reported in its economic report of the first of 2018 that bank fraud rose to 20,768 costing a whooping N19.77 billion. The suspension was also made that the Nigerian crime syndicate has made coordination in global crimes in different e-commerce frauds like money laundering, scams and another bank fraud (Gbegi & Adebisi, 2014).

Research’s Problem

Fraud is one of the major threats in the entire banking industry and is immune to it. The government and associated agencies of Nigeria have not applied enough efforts to prevent and control the bank fraud. If they had given a greater contribution, than the level of bank fraud would have declined to a greater extent (Onu, Umeakuka & Eneji, 2017). Different agencies like Nigeria Deposit Insurance Corporation (NDIC) and regulations like money laundering Act are involved in managing bank distress. Moreover, there are various laws and regulations which have the power to recover the debts of failed banks and check the insurance of dishonored cheques, but they are not showing enough efforts, thus, electronic frauds are increasing by the day in Nigeria (Gbegi & Adebisi, 2014). This has been attributed to complicity of internal staff and corrupt members of top management, without whose input fraud, fraud cover would have been reduced drastically. Thus, the problem of this study is to investigate why some of the members of staff are often behind frauds in financial institutions and the methods which they use to perpetrate such activities. Certainly, bank fraud has adverse effects on the depositors, the bank and the economy. Banks lose a lot of money which adversely offset business, confidence and sometimes lead to failure.

Concept of electronic banking fraud

According to Jassal & Sehgal (2013), E-banking is an application of the internet in the activities of banks. Banks have upgraded their strategies of business and are providing services through the internet. The usage of the internet has enhanced electronic transactions, which have increased the speed of the banking sectors worldwide. This advancement in the transaction electronically gives greater benefits to customers and financial institutions (Adediran & Olugdenga, 2010). However, fraudulent electronic activities are increasing and are threatening the security and services of electronic banks. E-banking fraud is a serious phenomenon that has brought greater difficulties in tackling issues. Electronic banking fraud is a theft that is committed by the usage of online technology to remove money illegally from bank accounts and even transfer money in various banks (Jassal & Sehgal, 2013). Banking fraud is a process of identity theft, which is generally made through techniques like phishing.

Types of Electronic fraud in banks

E-banking fraud is a global issue that is costly for both customers and banking sectors. Banks had lost billions of dollars due to either direct or indirect losses. Computer frauds act as a major contributor as they corrupt programs and brake systems through computer programmers. The manipulation of information provided in computers and ICT gives results to the technology revolution. There are different types of electronic frauds in banking sectors (Kolapo, Ayeni & Oke, 2012).

Triangulation is a fraud type where details of the customers are misused after the card details are entered the fraudulent bank’s sites. Hacking is another e-fraud where hackers get unauthorized access to the platforms of the banking system. Since online banking is highly utilized which has resulted in online fraud wherein information of cards is stolen while performing an online transaction (Igbaekemen, Abbah & Geidam, 2014). Various types of electronic frauds take place in banks such as debit card skimming, ATM fraud, Sim Swap, Money laundering, unauthorized Access, etc.

Effects of Electronic Fraud in Nigeria

Electronic fraud is becoming a major threat to the Nigeria banking industry. The fraud leads to monetary loss, which belongs to either customers or banks. This loss declines the productive resources present in the banks. These frauds have various effects on the banks of Nigeria (Imiefoh, 2012). E-frauds have destroyed the reputation of the banks and have dejected the habits of banking among the public. This fraud has also reduced the trust and understanding among employees, and there is a reduction in the profitability of the banks. The e-frauds have also placed psychological and emotional burdens on the victims of fraud, and there is a chance of public criticism (Igbaekemen, Abbah & Geidam, 2014). It had been analyzed that there is an increase in operating expenses and even reduction of operational efficiency which has even damaged the credibility of the financial motivation.

Prevention and Control of Electronic Fraud in Nigeria

Since the frauds reduce organizational assets and enhance the liabilities, the increased frauds would even decline the confidence of the banking public towards the bank (Abdurasheed, Babaita & Yinusa, 2012). The adoption of information and communication technology in banking and its implementation strategies have become greater importance as well as the topic of concern to all banks. The Nigerian government needs to strengthen rules and laws to deal with problems (Kolapo, Ayeni & Oke, 2012).

The Central Bank of Nigeria needs to issue operative guidelines to regulate the channel and report on doubtful transactions to the Financial intelligence unit. Since the prevention and detection of fraud have become complex, the application of advanced tools and technology would help banks to protect their customers through unethical activities (Abdurasheed, Babaita & Yinusa, 2012). Apart from these, the usage of CCTV cameras on all the ATM locations would even help in reducing frauds (Kathirvel,2013). Banks could even perform routine checks in the transfer of money to frustrate fraudster and would even apply internal Audit functions to assess risk linked with fraud.

A critical discussion of research design and quality criteria

The research methodology is a process of investigation which offers systematic review to its researchers regarding theory and even assists in acknowledging the output of the research question (Saunders &, 2009). This study will discuss research methods, research philosophy, approach, ethics, and other related methods. The aim of research is to identify the prevention and detection strategies of electronic banking fraud in Nigeria. This study makes the usage of qualitative research design along with interview findings to meet the research aim and objectives. This research will take care of all the criteria required to provide effective quality of research.

Main research question and research design

The main question of this research is: “What are the ways to preventing and detecting of electronic banking fraud in Nigeria?”

Research philosophy is an element that assists in knowledge expansion. Positivism and interpretivism are the two-research philosophy wherein positivism philosophy deals with scientific analysis whereas interpretivism philosophy is non-scientific methods to attain validity (Saunders &, 2009). Since this research aims to identify the prevention and detection strategies of electronic banking fraud in Nigeria, this study will make the usage of interpretivism philosophy to analyses the research topic.

Research approaches are mainly of two types namely inductive and deductive approaches, wherein the inductive approach gives focus on already published data, whereas the deductive approach analyzes newer data (Salkind, 2010). This research study will make the usage of inductive data to meet the research aim and objectives.

Research method plays a major role in analyzing the effectiveness of the study. Qualitative and quantitative research methods are the two research methods type wherein numerical data are utilized in the quantitative method. On the other hand, non-numerical data are used in the process of qualitative methods (Salkind, 2010). Since this research aims to identify the prevention and detection strategies of electronic banking fraud in Nigeria, qualitative data will be used.

Data collection is the process where information and data are collected through different sources. Primary and secondary data collection are two types of data collection wherein primary data are collected through firsthand data, whereas secondary data are the already used data (Saunders &, 2009). This study will collect primary data through interview and secondary data will be collected through journals, books, websites, etc.

Interview research: Since this research aims to identify the prevention and detection strategies of electronic banking fraud in Nigeria so primary data will be collected through interviews. 10 banks of Nigeria will be taken into consideration for an interview wherein 2 managers from each bank will be called for the interview. A total of 20 respondents will be interviewed, who will be questioned regarding the electronic frauds and its prevention strategies. The interview question will be open-ended and individual respondents will be interviewed for 10-12 minutes.

Data analysis is one of the essential parts of a research study where collected data are analyzed to attain reliable data. Primary data will be analyzed through thematic data analysis whereas secondary data will be analyzed through content-analysis tools.

Ethical considerations

Ethical consideration is one of the essential processes in the research process where efficiency and authenticity of the study are acknowledged. Ethical practices are highly essential for researchers to attain effective results. This research will be giving major emphasis on ethical practices wherein both primary and secondary data will be collected ethically. All the secondary data will be collected from reliable and authentic sources, and none of the information will be changed in this study. On the other hand, primary data will be ethically collected without hampering the physical and emotional well-being of the people. The interview participants will behave in an ethical manner and confidentiality will be maintained regarding their personal information. None of the participants will be a question on their personal matters, and emphasis will be given on effective communication.

A project plan with analysis of skills needed

Gantt chart is a graphical representation that assists the researcher in reviewing the period which would be needed to complete the whole task. This chart will describe the whole task from the start of the proposal preparation which took place between July till November. The skills needed in the research work is time management skills, researching skills as well as good communication skills.

A summary of your next steps

The next step would be to write a dissertation which will get started after the proposal gets approved. After the approval of the proposal, the introduction chapter of the dissertation will be started with major research work and in-depth analysis. The later chapters will also be written where major emphasis will be given on time management, researching skills as well as good communication skills.


Abdurasheed, A, Babaita, I. S. & Yinusa, M. A., 2012. Fraud and Its Implication for Bank Performance in Nigeria. International Journal of Asian Social Science, Vol. No. 12, No. 4, pp. 382-387.

Adediran, S. & Olugdenga, E., 2010. Impact of Fraud on Banks’ Performance in Nigeria. The Nigerian Academic Forum, Vol. No. 19, No. 1, pp. 22-26.

Gbegi, D. O. & Adebisi, J. F., 2014. Forensic Skills and Techniques in Fraud Investigations in The Nigerian Public Sector. Mediterranean Journal of Social Sciences, Vol. No. 5, No. 3, pp. 243-252.

Imiefoh, P., 2012. Towards Effective Implementation of Electronic Banking in Nigeria. African Research Review, Vol. No. 6, No. 2, pp. 290-300.

Igbaekemen, G., Abbah, M. & Geidam, M., 2014. The Effect of Corruption on Socio-Economic Development of Nigeria. Canadian Social Science, Vol. No. 10, No. 6, pp. 149-157.

Jassal, R. K., & Sehgal, R. K., 2013. Online Banking Security Flaws: A Study. International Journal of Advanced Research in Computer Science and Software Engineering, Vol. No. 3, No. 8, pp. 1016-1021.

Kathirvel, K., 2013. Credit Card Frauds and Measures to Detect and Prevent Them. International Journal of Marketing, Financial Services & Management Research, Vol. No. 2, No. 3, pp. 172-179.

Kolapo, T. Ayeni, R. & Oke, M., 2012. Credit Risk and Commercial Banks ‘Performance in Nigeria: A Panel Model Approach. Australian Journal of Business and Management Research, Vol. No. 2, No. 2, pp. 31.

Onu, F. Umeakuka, C. & Eneji, S., 2017. Computer Based Forecasting in Managing Risks Associated with Electronic Banking in Nigeria. Journal of Innovative Research and Advanced Studies (IJIRAS), Vol. No. 4, No. 3, pp. 390-396.

Saunders, M. &, 2009. Research Methods for Business Students. New Jersey: Prentice Hall.

Salkind, N. J., 2010. Encyclopedia of Research Design. London: Sage.

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