AUTOMATED FRAUD IDENTIFICATION SYSTEM IN BANKS / FINANCIAL INSTITUTIONS

1.1 Introduction

The effectiveness of any banking system depends on how secured the system is. The crave for information technology globally has greatly had an influence in our banking sectors. Thus a fest and quick development has erupted in many countries of the world in terms of automation advancement and technology. Such advancement includes the design and implementation of an automated fraud detection system which is witnessed in our various banking and financial sectors worldwide. According to Webster’s revised unabridged dictionary (1913), fraud is defined as “an intention deception resulting in injury to another person”. From federal trade commission fraud is defined as deception deliberately practiced with a view to gaining an unlawful or unfair advantage. In as much as financial sector is concerned, there should be possible ways made to avoid fraudulent from gaining access to the banking and all other financial sectors. By the introduction of an automated computer base security system, it will aid to eliminate totally the idea and practice of fraud in banking industries.

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Limitations of the Study and Definition of technical terms.

1.2 Background of Study

Access Bank is chosen as the background of study for the project. Over the past 26 years, Access Bank Plc. has evolved from an obscure Nigerian Bank into a world-class African financial institution. Today, Access Bank are one of the five largest banks in Nigeria in terms of assets, loans, deposits and branch network; a feat which has been achieved through a robust long-term approach to client solutions – providing committed and innovative advice. Access Bank has built its strength and success in corporate banking and is now applying that expertise to the personal and business banking platforms it acquired from Nigeria’s International Commercial bank in 2012. The next two years were spent integrating the business, investing in infrastructure and strengthening the product offer. As part of its continued growth strategy, Access Bank is focused on mainstreaming sustainable business practices into its operations. The Bank strives to deliver sustainable economic growth that is profitable, environmentally responsible, and socially relevant (Accessbankplc, 2021).

Access Bank is consistently seeking for ways to expand its service platform across the African continent. The bank currently operates through a network of about 366 branches across major cities and commercial centers in Nigeria, Gambia, Sierra Leone, Zambia, Rwanda and Democratic Republic of Congo (Accessbankplc, 2021).

The impact of the transformation agenda was reflected in the first year. The bank grew its balance sheet by 100% and posted an impressive N1 billion profit before tax. The profit before tax figure was more than the cumulative profit made by the bank in the previous 12 years. This also marked the beginning of what would be a six year record triple-digit growth trend. Similarly, earnings per share had rebounded to 21 kobo from a negative 2 kobo position, leading to a declaration of a 5 kobo dividend to shareholders for the first time in three years (Accessbankplc, 2021).

Access Bank is consistently seeking for ways to expand its service platform across the African continent. The bank currently operates through a network of about 366 branches across major cities and commercial centers in Nigeria, Gambia, Sierra Leone, Zambia, Rwanda and Democratic Republic of Congo. The impact of the transformation agenda was reflected in the first year. The bank grew its balance sheet by 100% and posted an impressive N1 billion profit before tax. The profit before tax figure was more than the cumulative profit made by the bank in the previous 12 years. This also marked the beginning of what would be a six year record triple-digit growth trend. Similarly, earnings per share had rebounded to 21 kobo from a negative 2 kobo position, leading to a declaration of a 5 kobo dividend to shareholders for the first time in three years (Accessbankplc, 2021).

Venue and Profitability: According to interim result for 2006 interest income is up close to 150% on the same period in 2005. Profit before tax is up to 91.4% to 1.14 million ($66 million) and the proposed interim divided up to 100% at #) 3.2 billion ($26 million).

Expansion: Access bank has more than 200 branches nationwide, rising to 280 by end of February 2007. The bank has begun it continental expansion in arena, where it recently obtained approval in principle to commence operations. The bank intends to builds its presence in major financial centres including South Africa, U.K, USA, Hong Kong and Dubai.

New Partnership for Growth: The banks recently entered into a technical partnership with BNP Paribas, one of the ten largest banks in the motion to fuel its advance in global banking. Both banks will cooperate extensively in areas of wide finance, asset management and product innovation as well as participate in the management of Nigeria’s foreign reserves, currently put at #32 billion ($258 million).

The concept of automated security system connotes on total and complete etc. since the working aim and tool of any financial organization is capital, the practice and principle cause of collapse or total down fall aforementioned is administrative and transactional frauds.

Meanwhile, there should be thorough verification of all the manual transaction used in banking system which includes; verification of cheque and detailed examination of cheque serial numbers, verification on unauthorized (illegal) access of customer’s accounts, verification of the signature and prevention of over-payment to customer’s during service of system and networking delays or failures.

ORGANIZATIONAL CHART OF ACCESS BANK NIGERIA PLC

1.3 Statement of Problem

There are difficulties experienced in the manual system or fraud detection in financial sectors. These factors therefore necessitate the implementation of a computer – base system in other to overcome the short comings 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:

1. To understand what fraud is all about and solutions to stop it in entirely.
2. To make an effective security on all the functional inputs of banking regulations practices.
3. To bring a seasonal programmer and an operator who will be taking charge of the automated software being developed.

1.4 Aim and Objective of the Study

The aim of the study is to Design and Implement an Automated Fraud Identification System in Banks / Financial Institutions. In achieving this aim, the following specific objectives were laid out as follows to develop an application software that will:

1. Aid in monitoring and controlling of fraudulent.
2. Provide quick enquiry about information in financial sectors.
3. Show the effect in the manpower of the security department because on most occasions charging the manual information system to an automated information system will equally cause redundancy.

1.5 Significance of Study

The proposed system would lead to an effective and comprehensive fraud control in banking sectors. For examples, computerized verification of illegal access of customers accounts, computerized verification of signatures. In a matter of seconds the computer system enhanced to do all these tasks, then all criminal and fraud minded people will desist from such acts.

1.6 Scope of the Study

This project work focus mainly on the design and implementation of an automated fraud detection in financial sector. (Banking system) and also provides well developed software to automate the new system.

1.7 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).

1.8 Definition of Terms

Fraud: Is defined as deception deliberately practiced with a view of gaining an unlawful or unfair advantage.