Full Project – Develop application software for cyber security fraud detection system in Nigeria banks
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CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
The effectiveness of any banking system depends on the security and efficiency of the system. The crave for information technology has greatly has an influenced our banking sectors. Thus, a fast and quick development has erupted in many countries at the world in forms of automation advancement and technology. Such advancement includes the automated system in commercial banks which is witnessed in our various banking and financial sector worldwide.
According to Webster’s revised unabridged dictionary, fraud is defined as “an intentional deception which results in injury to another person”. From the Federal Trade Commission, fraud is defined as deception deliberately practiced with a view to gaining an unlawful or an unfair advantage. In as much as financial sector is converted, there should be possible way made to avoid fraudsters from gaining access to the banking and all other financial sectors. By the introduction of an automated computer based security system, it will aid to eliminate totally the idea and practice of fraud in banking industries. Since the working aim and tool to any financial organization is capital, the practice and principle cause of collapse or total down fall aforementioned is administrative and transactional funds.
Meanwhile, there should be thorough verification of all the manual transaction used in banking system which includes:
- Verification of eloquent and detailed examination of cheque serial numbers
- Verification of unauthorized (illegal) access of customers’ accounts
- Verification of the signature
- Prevention of overpayment to customers during services of system and networking delay or failures
According to Kimani (2011), a way of making money is to stop losing it. The level of fraud in the present-day Nigeria has assumed an epidemic dimension. It has eaten deep into every aspect of our life to the extent that a three-year-old child takes about 419, the name given to the newly discovered advanced fee fraud that is hunting our nation.
In July 2004, Central Bank of Nigeria (CBN) unveiled new banking guidelines designed to consolidate and restructure the industry through mergers and acquisition. Banks and other Financial Institution Act (BOFIA) 1991, section 15, was also designed to prevent fraud and to make Nigeria banks more competitive and able to play in the global market.
The Nigeria Deposit Insurance Corporation (NDIC) 2007 annual report and statement of accounts reports that cases of attempted frauds and forgeries in secured banks, as at 2007 exceeded what was recorded in the year 2006. For instance, the NDIC report for 2007 disclosed that a total of 1,553 reported cases of attempted fraud and forgeries involving over symbols N10 billion compare with 1,193 reported cases of fraud and forgeries involving N4, 832.17 billion in the year 2006. The foregoing statistics clearly unfolds the extent to which fraud had eaten deep into the financial strength benefit the perpetrators to the department to the department of another person.
Today, banks cannot withstand the growing pressure of competition among various banks due to the monster called bank frauds. If this act of fraud is not arrested, it might delete our resources because foreign investors might not find it wise to transact business via our banks.
1.1 STATEMENT OF PROBLEM
There are difficulties experienced in the manual system or in financial sectors. These factors therefore necessitate the implementation of computer based system in order to overcome the short coming of the manual system of detecting fraud. By automating the system, rate of fraud flow will be eliminated in financial sectors, equally the statement of the problem of the work is also be:
- To understand what fraud is all about and the solution to stop it entirely.
- To make an effective security on all functional input of banking regulation practices.
- To bring a seasonal programmer and an operator who be taking care or charge of the automated software being developed.
1.2 AIM AND OBJECTIVE OF THE STUDY
The aim of study or research is to automate systems in commercial banks and the main objectives of this research include;
- To aid in monitoring and controlling of fraudulent activities in banking sector.
- To design a system or software that will be used in detecting fraudulent activities in commercial banks or financial sectors
- To aid in the total elimination of fraudsters from gaining access to the hiding information in our various banking sectors.
- To provide quick enquiry about information in financial sectors.
Furthermore, the study will show the effect in the manpower of the security department because on most occasions changing the manual information system to an automated information system will equally cause redundancy.
1.3 SIGNIFICANCE OF THE STUDY
The design and implementation of automated in commercial banking system would lead to as effective and comprehensive fraud control in banking sectors. For example, computerized verification of illegal access of customers account, computerized verification of signatures, in a matter of second the computer system enhanced to do all these tasks, then all criminal and fraud minded people will desist from such acts.
1.4 SCOPE OF THE STUDY
This project work focuses mainly on the design and implementation of automated system in Nigeria commercial banks using application software developed by the researcher.
Also, this research work when implemented will be beneficial to the following groups;
- Banks and Financial Institutions
It will be beneficial to the authorities concerned with banking operation, management, staff customers ad prospective investors in the industry so as to identify the various means (theft, embezzlement, forgeries etc) employed in defrauding banks and to identify the cause of frauds in banks in Nigeria.
- Government
The government will find this work relevant to future policy and decision making in terms of restructuring its agencies for the better performance in detecting frauds in Nigeria banks.
- General Public
The study will be useful to the general public because the banking industry touches the lives of everyone in an economy. Banks all over the world have contributed immensely to the economic growth and development of nations. As such, problems such as fraud which can hinder the smooth operation of the banking industry should be viewed with all seriousness in other not to intercept or destroy the rate of development.
- Academia
It will also be beneficial to people who which to carry out further research in this area, to find this work relevant in their research.
1.5. LIMITATION OF THE STUDY
The research of this work is limited to Nigeria bank and financial sectors. Much limitation was encountered during the process of gathering the information for the development of this project work to this extent. It was not an easy one, so many constraints was encountered during the collection of data. The limitation focuses of the following constraints:
- Financial Contraints: the cost of sourcing for information and data that are involved in this work is high in the sense that we all know that information is money.
- Time: A lot of time was involved in writing and developing this work.
1.6 DEFINITION OF TERMS
- Fraud: Is defined as deception deliberately practiced with a view of gaining an unlawful or unfair advantage. It can also be defined as a deceit or trick deliberately practiced in order to gain some advantages dishonestly.
- Fraud Detection: is the identification of actual or potential fraud within an organization. It relies upon the implementation of appropriate system and processes to spot the early warning signs of fraud.
- Bank Fraud: Bank fraud is defined as the use of fraudulent means to obtain money, assets, or other property owned or held by a financial institution, or to obtain money from depositors by fraudulently representing to be a bank or financial institution.
- NDIC: Nigeria Deposit Insurance Corporation. It is specially charged with the responsibility of protecting depositors by insuring customers deposit to the sum of N200,000.
- Economic crime: this is the manifestation of criminal act done either solely or in an organized manner or without associates or group with the purpose earning wealth or being rich through all illegal means.
- Identity theft: this is an action that is been proceed with enable a fraud to occur.
- False billing fraud: this occurs when a business or an individual receives a bill for a product whereby the representation of the product by the promoter was either false or misleading or whereby the product was either never ordered or received.
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Full Project – Develop application software for cyber security fraud detection system in Nigeria banks