THE ROLE OF COMPUTERS IN FRAUD DETECTION AND PREVENTION IN THE NIGERIA BANKING INDUSTRY

Background: I have developed a significant interest in this subject due to the observation that the guiding principles of prudence and honesty within the financial industry have, to a considerable degree, not been upheld. In the contemporary banking industry, instances of fraudulent activities perpetrated by both employees and clients have become increasingly prevalent. These deceptive practises ultimately result in financial difficulty for the banks involved. Nowhere is fraud more severe than in the banking sector, as it represents the primary cause of bank failures. The precise extent of fraud remains uncertain due to the presence of unreported and undetected cases, as well as the lack of comprehensive reporting for all detected instances.

Furthermore, the detection of fraudulent activities may not be effectively accomplished through the assistance of employees, as some of these employees themselves engage in such fraudulent acts and intentionally withhold information that could aid in the detection of fraud. By employing bankers to identify fraudulent activities, not only may the detection of fraud be facilitated, but it can also contribute to the prevention of fraudulent practises inside the banking sector.

Today, computers have become instrumental in resolving issues across various domains, serving as a convenient tool for efficiently and expeditiously completing a wide range of tasks. With the advent of computers, the communication system has been enhanced, and automotive electronic devices have been integrated into the banking system. Additionally, banks have implemented numerous precautionary measures to mitigate fraudulent activities within the banking system. The phenomenon of fraud has assumed a complex nature, with its scale and magnitude growing exponentially, as noted by Olaleye Amupitan in 1981.

In the aforementioned article, the author examines the hindrances to the expansion of the banking system. The investigation reveals that banks have implemented additional measures to ensure the authenticity of cheques due to the prevalent occurrence of fraud and forgery. Consequently, banks incur a daily financial loss of N1.5 million as a result of these fraudulent activities. Adegbites (1996), in a separate publication on the cash economy phenomenon, similarly observes that fraud has evolved to such an extent that forged cheques now closely resemble their genuine counterparts.

In an effort to mitigate the prevalence and velocity of fraudulent activities within their institutions, banks have implemented effective preventive measures, such as the provision of computerised machines for the processing of checks issued against their clients' accounts.

According to Femi Adekaye (1998), in his essay, it has been observed that consumers in Nigeria banks spend a minimum of around two hours in the banking hall in order to withdraw their funds. The duration of the verification procedure is considerable, resulting in a scenario where the consumer may experience frustration and potentially fall asleep before the cheque is approved for payment by the cashier. However, the utilisation of computers has effectively resolved these aforementioned issues.