Design And Implementation Of Computerized Fraud Detection System In Banks (A Case Study Of Intercontinental Bank Plc)

Project and Seminar Material for Computer Science and Computer Engineering

Design And Implementation Of Computerized Fraud Detection System In Banks (A Case Study Of Intercontinental Bank Plc)


Abstract


Banks deal essentially on cash, financial instruments and other documents, which are generally negotiable and easily transferable in nature. Based on sudden and very noticeable increase of fraud and crime in the financial sector which results in loss of billions of pounds and dollars would wide annually for over a long period of time, several modern automated techniques in detecting fraud and crime are continually being developed and applied to many financial sectors.

Financial detection system involves monitoring the behaviour of population of users in order to estimates, detect or avoid certain undesirable behaviours.

This project work presents and preview the total survey or techniques used in excessive fraud detection, telecommunication fraud detection, write – if accounts receivable fraud detection and computer intention detection in order to develop a more efficient and comprehensive fraud detection system.
A fraud detection system was designed using log down methodology.


Table Of Contents


Preliminary Page(s)

  • Title page
  • Certification page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents.

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Objective of study
  • 1.3 Statement of problem
  • 1.4 Scope of study
  • 1.5 Limitations of study
  • 1.6 Significance of study
  • 1.7 Definition of terms

Chapter Two

2.0 Review Of Related Literature


Chapter Three

3.0 System investigation, analysis and design of input / output forms

  • 3.1 System investigation
  • 3.1.1 Research methodology
  • 3.1.2 Methods of data collection
  • 3.2 System analysis
  • 3.3 system design
  • 33.1 Input design
  • 3.3.2 out put design
  • 3.4 Background of the study
  • 3.4.1 Problem of the new existing system

Chapter Four

4.0 Programming, Testing and Implementation

  • 4.1 Choice of programming language
  • 4.2 Algorithm / flowchart
  • 4.3 Debugging
  • 4.4 Coding / Coding platform
  • 4.5 Testing
  • 4.6 Documentation
  • 4.7 Hardware and software requirements
  • 4.8 Implementation
  • 4.9 Maintenance

Chapter Five

5.0 Summary, conclusion and recommendation

  • 5.1 Introduction
  • 5.2 Summary
  • 5.3 Conclusion
  • 5.4 Recommendation
  • References
  • Index

Chapter One


1.0 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 defection system which is witnessed in our various banking and financial sectors world wide.

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. 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;

  1. Verification of cheque and detailed examination of cheque serial numbers.
  2. Verification on unauthorized (illegal) access of customer’s accounts.
  3. Verification of the signature
  4. Prevention of over-payment to customer’s during service of system and networking delays or failures.

1.1 Background Of Study

Access Bank is chosen as the background of study for the project. Access Bank was found in 1989, it is one of the corporate Nigerian’s most establish banks. As part of the reform – include consolidation process in 2005, Access Bank executed a merge with three other banks; Equity bank of Nigeria Plc, Global Bank Plc and Gateway Bank Plc.

Increasing the capital base, according to its un-audited interim result as at August 31, 2006 Access Bank has a capital base in excess of #61 billion ($491 million) ranked as Nigeria’s fourth most capitalized bank, as it was gone to press, Access Bank is in the market to raise an additional #50 billion ($403 million) by way of a combined right issue and public offer for subscription if over described, the bank has announced its capable of absorbing up to #80 billion ($645 million) which would take its capital base to #130 billion ($1 million placing in Nigeria – Half the capital raise is intended towards increasing the working capital of the bank, the rest will be apportioned to e-channel development and increasing its branch network.

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 executive management of Access Bank: C/CEO: Mr. Herbert Wigwe; Chairman: Raymond C.Obieri director, Chris A. Alabi.

Access Bank is constituted to provide banking services to the general public ranging form.

  1. Handling of cash and provision of over – draft
  2. Keeping of accounts for its customers
  3. Transfer of funds to another in different remote stations.
  4. Self keeping of important documents.
  5. Stock brokeage for its customers etc.

Organizational Chart Of Access Bank Nigeria Plc.

Design And Implementation Of Computerized Fraud Detection System In Banks (A Case Study Of Access Bank Plc)


1.2 Objective Of The Study:

The main objective of this work is to design automated software that will automate our banking sector and equally aid in the total elimination of fraudulent from gaining access to the hiding information in our various banking sectors.

The Objective Of The Study Focuses On The Following:

  1. To aid in monitoring and controlling of fraudulent.
  2. 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 charging the manual information system to an automated information system will equally cause redundancy.


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 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.


1.5 Limitation Of Study:

The research of this work is limited to Access bank plc.

Many limitations were 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 on the following constraints:

Financial Constraints:

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 Significance Of Study:

The design and implementation of an automated fraud detection in banking 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.


1.7 Definition Of Terms:

Fraud:

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

Economic Crime:

This is the manifestation of criminal act done either solely or in an organized manner with or without associates or group with the propose earning wealth or being rich through all illegal means.

Identity Theft:

This is an action that proceeds 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 were either never ordered or received.

Internet Fraud:

This refers generally to any type of fraud scheme that uses one or more components of the internet such as chat room, e-mail, message boards or websites to present fraudulent transactions or to transmit the proceed of fraud into in financial institutions or to others connected with the scheme.

Password:

This is a measure of protection against intruders from gaining access to the documents and secretes information.

System Investigation:

This is an in-depth and study of an existing system with regard to its producers in working out an improved system.

Research Methodology:

This is an investigation undertaking in order to discover new factors through planning and systematic collection, analysis and interpretation of data.

Direct Personal Observation:

Involves the means of watching people, events and obtaining a lot of first hand information relating to the people concerned.

Personal Interview:

This is a means of which information needed are source directly, by interviewing people who are going to use the system.

Questionnaire:

This is the most method of data collection and is advisable for collecting answers to research questions.

System Analysis:

Is defined as the study of a system to access the feasibility of proposed information system and to determine how it should function.

Input Design:

The input refers to the data that is supplied to the system for it is to process and produce information.

Output Design:

The output form the system refers to the information that is gotten from the system.

Algorithm:

Is defined as a description of a procedure which terminates with a result.

Flow Chart:

Is a diagrammatic representation of the sequence of steps involved in carrying out a process.

Debugging:

Is defined as the process of locating and fixing error (know as bugs) in a computer program or hardware device.

Coding:

Is defined as the representation the algorithms written for a particular task with the aid of a high level language that help to translate a simple code to machine code and produce the minimum output needed.

Test – Run:

This is an exercise that puts a machine, process or system through a series of actions to ascertain its current status or to verify its reliability to ask.

Documentation:

It is an important part of implementation process. It serves as a method of communication among the people responsible for developing.

Implementation:

This enable programmer to work modules in parallel and periodic testing and check on performance of the whole system allowed manageable growth in complexity without introducing untraceable bugs.

Maintenance:

This is the change in hardware, software and documentation or procedures to a production system in order to correct error or anomalies, meet new requirements or improve efficiency.

Corrective Maintenance:

This is identification and removal of errors or failures in the system.

Preventive Maintenance:

This hooks or regular inspection or periodic monitoring of the system to detect frauds as such invokes maintenance in such area so as to forestall bridges in the operation of the system.


Chapter Five


5.0 Summary Conclusion And Recommendation

5.1 Introduction

This chapter mainly deals with the summary view of the research done on this project as a precipitate of automating fraud detection and control.

It equally deals with the recommendation and conclusion drawn from the research conducted.


5.2 Summary

The research of this project was carried out in Intercontinental Bank Nigerian Plc. Economically, fraud pose serious treat to corporate growth and existence, it leads to distress and failure of most financial institutions and affects psyche of both the corporation entities and public as well. Fraud has affected the normal life of many who could not have been judge if not for their observance of the fanatics or fraud and forgeries. Societal values have been debased as a result of easy wealth form fraud. The implication of this is that societal values have been misplaced; hence wealth is accorded prominence and recognition in society without questioning the source of wealth politically.

Fraud and forgeries have weakened the socio political life of the people as concrescence is now being paid for during political campaigns. Fraud as a big time business has become a means and measure of buying pouter and influence indeed, the growth of organized crimes influence and power in the world’s financial markets is the most serious problem facing both developed and developing countries, hence political and economic financial institutions has been weakened.

According to international chamber of commerce (1986) “This tardiness” (fraud) allowed the mob (perpetration) to entrench themselves and buy political protections that gives them immunity form prosecution.
The findings in the study were arrived at, through data collection form oral interview secondary data and published data.


5.3 Conclusion

The computer is here to stay and the society combines to receive many benefits form the employment of computers in the daily operations which the system helps to carry out.

Due to some of the problems which are found is fraud and crime statistics which are partly as a result of manual process of rewarding retrieval and other file operations, automated systems are just the only alternative to solve such problems.

Frauds have negative effects on the investment rate y foreign investors. The fraudulent activities scare foreign investors as witnessed during the 419 eras in Nigeria. Frauds in the banks have the implication of job losses. Many financial institutions may face the possibility of retrenchment as a consequence of fraud leading to distress and failure. Anacto (1971), observed that fear gripped employees of banks as the boards and management resolved to intensify program which may lead to further job losses in Economy. The consequence of job losses in an economy like Nigeria with the extended family system is that, the direct loser is the retrenched employed but the indirect and most hit are the dependent relatives who over time retired entirely on the bread winner for their survival.

The spillover effects on this kind of scenario on the socio political systems in the country are obvious namely increase in the crime rate and the degradation of the society in general.

There is no doubt whenever what fraud is out countries financial system and in particular the banking sector has triggered off a spale of direct consequences with the nations.


5.4 Recommendation

The proper responsibilities for the prevention and detection of fraud rest, therefore with management. The management of every financial sector (banks) can do this by instituting adequate system of internal and detection of fraud should be a collaborative effort of banks, publics, government, customer and some other relevant agencies.
Equally the management should build software like artificial intelligent and robotics that has the ability to detect fraudulent behaviour by analyzing transactions and alerting staff to suspicious activities. As commercial applications of research into artificial intelligence, these systems give the impression of minimizing human abilities for recognizing usual activities.

However much will depend on the willingness of government, the police and the business community to work as one unit to create effective defense in an environment where detection is assured. Lastly, macro economics policies that will take care of the problem of unemployment, inflation and instability in the nation’s economy should also be intensified and itemized to fully eliminate the idea of fraud in the nation.


Design And Implementation Of Computerized Fraud Detection System In Banks (A Case Study Of Intercontinental Bank Plc)


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