ABSTRACT
Banks play a very significant role and are a key infrastructure of the financial sector of any economy. The efficiency of the banking sector in a way determines the reliability of the economy.
The banking business is replete with lots of risks. Of all the risks faced by banks, fraud risks are the most pervasive and most destabilizing to banks. Fraud results in the largest source of losses to banks in Nigeria and also the largest single cause of bank failures.
Because of the magnitude of these losses and the level of their impact on banking operations is the only main reason for this research study. Recently, the incidence of frauds has got the attention of all and sundry and has been the focus of the government’s attention. Therefore, the study aimed at examining how computers can be used for detecting fraud in the banks operations especially towards enhancing fraud minimization in Nigeria using UBA Plc. as a case study.
Together, the data for this study, both interviews and questionnaire methods were used. And the data collected was analyzed using simple statistic techniques of percentages, averages, etc. the information generated was used in formulating recommendations that are intended to help banks appreciate the use of computers in their banking operations as deliberate effective measures towards minimizing or preventing fraud in bank operations in the banking industry in Nigeria.
It is hope that when such measures are implemented will
enhance banks stability survival and more profitability in Nigeria.
TABLE OF CONTENTS
TITLE PAGE
DECLARATION……………………………………………………………………………ii
CERTIFICATION…………………………………………………………………………iii
DEDICATION……………………………………………………………………………iv
ACKNOWLEDGEMENT………………………………………………………………..v
ABSTRACT……………………………………………………………………………….vi
TABLE OF CONTENTS………………………………………………………………vii
CHAPTER ONE
1.1 OVERVIEW OF THE STUDY…………………………………………………1
1.2 STATEMENT OF THE PROBLEM……………………………………………2
1.3 OBJECTIVE OF THE STUDY…………………………………………….…2
1.4 SCOPE OF THE STUDY…………………………………………………..…3
1.5 RESEARCH METHODOLOGY………………………………………………3
1.6 LIMITATION OF THE STUDY………………………………………….….3
1.7 SIGNIFICANCE OF THE STUDY………………………………………….4
1.8 DEFINITION OF TERMS……………………………………………….……5
CHAPTER TWO
2.0 LITERATURE REVIEW………………….………………………………….….7
2.1 INTRODUCTION…………………….……..……………………………….….7
2.2 BANKING AND FRAUD PRACTICES
IN BANKING OPERATION IN NIGERIA………………………………….7
THE HISTORICAL DEVELOPMENT OF COMPUTER IN NIGERIA…….8
THE CLASSIFICATION OF COMPUTERS…….………………………12
THE APPLICATION OF COMPUTER SKILLS
IN BANKING OPERATIONS……………………………………………….18
FRAUD AND CAUSES OF FRAUD IN BANKS IN NIGERIA………20
TYPES OF FRAUD AND THEIR EFFECTS ON BANKS…………….25
COMPUTER APPLICATION AND FRAUD CONTROL
IN NIGERIAN BANKS…………………………………………………………41
2.8.1 FIRST BANK OF NIGERIA PLC…………………….……………………41
2.8.2 ZENITH INTERNATIONAL BANKS PLC………………………………..41
2.8.3 STANDARD TRUST BANK PLC………………………………………..42
2.9 SUMMARY……………………………………………………………….…….43
CHAPTER THREE
3.0 HISTORICAL BACKGROUND OF UBA PLC…………………………..44
3.1 INTROUCTION………………………………………………………………..44
3.2 HISTORICAL BEGINNING OF UBA PLC………………………………44
3.3 MISSION AND OBJECTIVE OF UBA……………………………………45
3.4 THE GENERAL OPERATION AND PRODUCTS OF THE BANK…47
3.5 THE GENERAL MANAGEMENT AND CONTROL
OF THE BANKS OPERATIONS……………………………………………51
3.6 MANAGEMENT PROBLEMS OF THE BANK WITH
REGARDS TO FRAUD ACTIVITIES…………………………………….52
3.7 PROSPECTS OF THE BANK IN NIGERIA…………………………….52
3.8 SUMMARY………………………………………………………………………53
4.0 RESEARCH
METHODOLOGY…………………………………………….…………………54
4.1 INTRODUCTION……………………………………………………………..54
4.2 METHODS OF DATA COLLECTION…………………………………….54
4.2.1 PRIMARY SOURCES…………………………………………………………54
4.2.2 SECONDARY SOURCSE…………………………………………………….55
4.3 DATA COLLECTION PROCEDURES……………………………………..56
4.4 SAMPLING AND SAMPLING TECHNIQUES……………………………56
4.5 POPULATION AND SAMPLE SIZE USED…………………….………57
4.6 METHODS USED FOR DATA ANALYSIS………………….………….57
4.7 SUMMARY……………………………………………………………………..57
CHAPTER FIVE
5.0 DATA PRESENTATIONAL ANALYSIS AND THE FINDINGS……..59
5.1 INTRODUCTION……………………………………………………………….59
5.2 DATA PRESENTATION AND ANALYSIS……….…………………….59
5.3 FRAUD PRACTICES IN UBA PLC……………………………………….75
5.4 COMPUTERAIZATION AND ITS APPLICATION IN UBA PLC….80
5.5 RESEARCH FINDINGS……………………………………………………..84
5.6 DISCUSSION ON RESEARCH FINDINGS……………………………85
CHAPTER SIX
6.0 SUMMARY, CONCLUSION AND RECOMMENDATION…………….87
6.1 SUMMARY……………………………………………………………………..87
6.2 CONCLUSION…………………………………………………………………88
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RECOMMEDATION………………………………………………………..….89 |
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6.4 |
BIBILOGRAPHY…………………………………………………….………....91 |
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6.5 |
APPENDICES……………………………………………………………………94 |
CHAPTER ONE
1.1 OVERVIEW OF THE STUDY
Fraud can be described as a conscious premeditated action of a person or a group of persons with the intention of altering the truth and or fact for selfish personal monetary gain. It involves the use of deceit and trick and sometimes highly intelligent cunning and known-how. The action usually takes the form of forgery, falsification of documents and authorizing signatures of employees’ as well as customers engaging in fraudulent practices in the banking sector. The existence of frauds in our banks is not uncommon or unexpected phenomenon, because of all the problems confronting the Nigerian banking industry.
The level of frauds in the banking industry of the Nigerian economy has assumed epidemic dimensions causing devastating effects. Which leads to loss of assets and denting of image.
Thus losses resulting from frauds will reduce the resources of the bank thereby reduce level of resources crippling the operations of the bank affected and in some cases the bank may be forced to close down its banking operation for lack of adequate funds. When such asituation arises, it will led to loss of confidence in the affected and also reduced customers patronage.
Therefore, if banks are to be well protected, they must build basic defense, pattern into their everyday operations, through the computerization of its activities or operations.
Also, banking distress occurs when a bank or some banks in the system experience ililiquidility or insolvency resulting in a situation where depositors fear the loss of their deposits and a consequent break down of contractual obligations. While a bank is said to be illiquid when it could no longer meet its liabilities as they mature for payment, it is said to be insolvent when the value of its realizable assets is less than the total value of its liabilities (a case of “Negative net worth”). These could lead to bank runs as depositors lose confidence in the system and seek to avoid capital loss. The uncertainty generated as a result of distress in banking institutions, if left unchecked, often raises real interest rates, creates higher costs of transactions and disrupts the payment mechanism with the attendant economic consequence.
Those factors examined here lead some banks into financial distress character by poor asset quality, uliquidity, under capitalization and insolvency. For example on July 6th 2004 the Central Bank of Nigeria (CBN) Governor Professor Charles Soludo announced the re-capitalization reforms that included among other provisions that existing banks must have N25 billion capital asset by
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December 31, 2005. this reform will make some banks either to be acquired by bigger and stronger banks or fold up its activities.
In summary, computerization as an effective strategy can be used for minimization of fraudulent activities in the Nigerian Banking Sector.
1.2 STATEMENT OF THE PROBLEM
The Nigerian Banking Industry seemed to be one of the most profitable within the Nigerian Economy. However, the banks in the course of proving their banking services face the risks of loosing their money through fraudulent practices thereby destabilizing its operation. Therefore, fraudulent practices is one of the largest source of losing money by banks in Nigeria and it is also the largest single causes of bank failure because of its magnitude of impact on banks operation.
The magnitude of this problem and its implications in the banking sector has inspired this research study in the Nigerian banking sector with aim of examining how computerization can help minimize this devastating problem.
Therefore, the basic problem of this study is how to prevent or minimize fraud in banks in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The main aim of this research work is to examine how computer can be used for the minimization of fraud in the Nigerian banking sector.
Objective of this study focus on the following areas:
1. To identify the causes of fraud in banks
2. To identify the various types of fraud in banks
3. To determine the effects of fraud on the business of banking
4. To examine the extent of which computers can be used to minimize fraud in Nigeria.
5. To examine other measures and techniques that can be used for fraud prevention.
6. To assess the effectiveness and efficiency of using computerization to minimize fraud in banking sector.
7. To make suggestions and recommendation as to how computer and other measure can be used to prevent fraud.
1.4 SCOPE OF THE STUDY
This study is based mainly on UBA Plc. as a case study; it covers mainly the activities of fraud practices in banks and various strategies used by those who perpetrate such practice. The study focused to gather data from management and staff of UBA Plc.
And finally, it examines the extent to which computers are used in UBA Plc. especially with the aim for minimizing fraud in the banks operations.
1.5 RESEARCH METHODOLOGY
The data used for this research was obtained from primary and secondary sources. The primary sources were used gathering primary data through the use of personal interviews with some management and staff of the bank. The secondary sources include published lectures. Central Bank of Nigeria’s Publications such as Bullion, Nigeria Deposit Insurance Corporation Quarterly Reports, Business Journals, Articles etc.
1.6 LIMITATION OF THE STUDY
This section discusses the limitation encountered during the course of the study. These limitations were as follows:
1. The use of computer soft wares in banks is a current issue; therefore, getting materials was not easy. So, current journals of UBA like the FLEXCUBE series, which is not easy to get.
2. Finally, financial constrains also played a part in limiting certain aspects of the research work.
1.7 SIGNIFICANCE OF THE STUDY
The importance of this study to banks like UBA is indispensable. The ability to ensure that frauds are properly managed in banks cannot be overemphasized. Also the study would aid banks to realize and to appreciate what computerization contribution can do in preventing fraud.
Also the study will help to achieve the following:
a. Help management of bank on how to effectively plan, and make decisions for the general smooth running of the bank using computers.
b. The result of this study (findings) shall enable users especially the banks to reappraise its own management and to review it methods of operations for a more result-oriented approach in attempting to minimize fraud-using computer.
c. The study aimed at helping management towards the effective computerization of their banking operations to reduce error and frauds.
d. The future researchers on this topic would find this study as basis for further research effort or studies.
1.8 DEFINITION OF TERMS
This section attempts to define some key terms used in this research work.
EFFECTIVENESS: The accomplishment of a desired objective, goalsor action.
EFFICIENCY: The accomplishment of an objective, goals or actionwithin the minimum resources.
DATA: Is a symbolic representation of facts about people, places etc.which are raw or undesired in their present form and need to be transferred into a refined or desired form.
SYSTEM: The word generally refers to interrelated items that worktogether as a unit.
SOFTWARE: This means a collection of programme that are madeto work together for a specific purpose.
PROGRAMME: A set of instructions given to a computer.
PROGRAMMING: The process of giving these instructions to thecomputer is called computer programming.
BASIC: (beginner all purpose symbolic instruction code) is the mostpopular language for personal computers.
COMPUTERIZATION: This is eliminating manual aspect of the workor operation through the use of computer based on accounting system.
FRAUD: Any deliberate attempt in whatever form (spoken, written,physical designed) to deprive a legitimate owner of his/her assets, properties or rights.
CHEQUE: A bill of exchange drawn on a bankers and payable ondemand.
PROSECUTION: An act of starting legal proceeding against afraudster.
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