The Role Of Computer In Fraud Detection And Prevention

Project and Seminar Topics with material for Banking and Finance

The Role Of Computer In Fraud Detection And Prevention


Fraud has been identified as the major cause of distress and unprogressive nature of most business organisation in the country. Even though, there are intelligent people who work round the clock to fault the system; but there are more intelligent people who build on fraud check devices hence the computer. It is the aim of this study to find out the role of computer in fraud detection and prevention in business organization (A Case study of First Bank of Nigeria Plc.) The work has five chapters, chapter one contains the body of the topic which included the problems studied, why the study was carried out and the definition of terms. An extensive review of related literature on computer as it relates computer crime, types, Computer fraud, Types, role of Computer in fraud detection and prevention are highlighted in chapter two. Chapter three dealt with the design of the study, the methods used in the distribution and collection of the questionnaires and the treatment of the data. The data got from the research survey were analyzed interpreted and the hypothesis tested in chapter four. Finally, the summary of findings, conclusion on the research and recommendation are all in chapter five. If Banks and other business organisations in the country would put the findings and recommendations to use, the incessant incidence of fraud will not only be detected and prevented but the customers will be satisfied with the services, which will bring a continuous increase in profit there by making the problem of the banks a thing of the past.

Chapter One

1.0 Introduction

The computer machine and computer technologies are both human oriented. Though, the computer is brilliant and intelligent, it cannot compete with human. This is to say that the computer technology excellence of intelligence is desirable from the human elements that interact with the system and technology to make it work. It is whatever these human elements commends the computer to do that is does. Computer is absolutely harmless except it is imbued with the tendency to harm. Computer is basically defined as an electronic machine which accepts data form an input devices, perform arithmetic and logic operations in accordance with defined data and finally transfer the processed data to an output device through the central processing unit (CPU) either for further processing or to be produced as a final result.

Computer technology has come to be accepted as an indispensable in novation if fraud detection and prevention in the banking industry.

Fraud has for a long time now remained the cancer-warm that is biting hard on the back bone of banking industry. The effect of this phenomenon has led to the liquidation of many banks in Nigeria.

It has been the major cause of the ugly development in our Banking industry now refereed to as ‘DISTRESS’
The development which records high occurrence of our banks has caused a big question mark on the credibility of Nigerian in both with and outside the country. The need to combat the double –headed monster by all means gave rise to the issue of cultiviatism of the banking industry especially in the areas susceptible to fraud.

1.1 Background of the Study

Since 1986 when structural adjustment programme was introduced, the banking business changed. As the number of branches grow form sixty five in 1985 to one hundred and fifty five in 1994, the techniques of delivering bank services changes. In November 1990, society general Bank launched their first Acitomated teller machine (ATM) with trade name SGBN’S Aim’s cash point 24. The followed by first bank of Nigeria Plc in December 1991 with their ATM called “First cash” located in six branches in Lagos.

The House journal of first Bank of Nigeria (1991) affirmed that prior to AIM, other forms of electronic banking existed notable among which were computers. The computerization of Enugu (Main) branches in April, 1989 and also the recent introduction of local Area network (LAWS) or the 26th of October, 1999 and the Reengineering projects which will usher in the wide Area net work (WAN) before the next millenium.

But how far has the computer networking of these banks improved the long stay of customer on the counter; could manual application of interest on savings accounts, commission, on turnover and overdraft account handled automatically by the system? Can management always extract up to data information or account position of the operation at a particular point in time.

The state of the banks services t customers are such that customers are made to stay helplessly on the counter for hours, only to be attended to by neatly dressed impolite bank cashier. The security checks are simply cumbersome and bank staff wishing to stay on their employment vigorously follow these procedures. Then bank manager and he staff seem not to bother as they profiled form chars queues generate. It created in them an area of self importance and a customer who is time conscious will have to see him/her in his/her company officer for behind the counter deal. However, there is no doubt that the fear of fraud slaved down bank services and has militated against performing any feast in the art of quick and excellent quality service.

The experience of the banks is that any money that goes out by mistake does not come back and there are many people who are prepared to rob the bank through fraud. But computer has helped a lot in the detection and it prevention in banking industry.

Based on personal experience and views of others on the role of computer in fraud detection and prevention in banking industry in Nigeria, the researcher was motivated to evaluate the role of computer in fraud detection and prevention in banking services. A case study of first bank of Nigeria Plc Enugu main branch.

1.2 Statement of Problems

It has been observed that many people has been manipulating money and embezzlement of fund in Business organization as in first banks of Nigeria Plc Enugu branch. Observation also shows that people prefer manipulated money to their main salary which lead to the liquidation of the organization. Handling such until the inversion of computer. What then are the role of computer in fraud detection and prevention in business organization ? This fundamental question underlines the problems of this study.

This research work seeks to identify the major problems confronting the banking system and its is distributed towards the following statement of problem.

  1. One major problem in the banking industry is the rate of financial fraud which is evidenced by poor accounting recording and poor remuneration.
  2. Another problems could be to determine the consequences of financial embezzlement in the banking industry which could lead to poor profit base, retrenchment and the bank being distressed.
  3. The inability of then to ascertain who actually are the fraudsters which include the officials of the banks, customers and the society at large.

1.3 Research Questions

To guide the study, the following research questions were raised.

  1. What is the role of computer on fraud detection ?
  2. How can computer be used to prevent fraud ?
  3. What are the causes of fraud in business organization ?
  4. What are the causes if fraud in business organisation ?
  5. What are the consequences of fraud in business organization ?

1.4 Objectives of Study

The objectives of this study are as follows

  1. To find out the role f computer in fraud detection.
  2. To determine how computer can be used to prevent fraud.
  3. To identify the causes of fraud.
  4. Suggesting measures of preventing fraud.
  5. To ascertain the consequences of fraud in business organization.
  6. To make recommendation based on the findings.

1.5 Significance of the Study

The significance of this study lies on the great importance attached to the computer in business organization from the findings of this research, people will know the importance of computer in fraud detection and thus prevention.
This work is significant in the sense that it will be an eye opener to the pubic at large. Another significance is that people will know that there is no means of manipulation of fraud where computer is installed. Interested organization, business centers, institution and many others having know the role of computer will make use of computer in their organization for them to curb this fast growing problem will benefit from the study.
It will help the organization to know when their money is embezzled.

1.6 Scope of the Study

This study covers a period of five years, that is from 2003 backwards. This period was chosen because the problem of fraud in banking appears to be more prevalent in the this period.
First Bank Plc Enugu of Enugu State has been chosen as the study area.

1.7 Research Hypothesis

Null Hypothesis (HO)
  • HOI: There is no significant difference on the views of senior and junior staff of first bank of Nigeria, Okpara Avenue on the extent of improved customers services because of computer installation.
  • HO2: There is no significant difference between the staff on the extent to which management information system is adequate without computer.
  • HO3: There is no significant difference between the staff on the extent to which computer installation has helped in the achievement of the objectives.
  • HO4: There is no significant difference in the views of Senior and Junior staff of first bank of Nigerian Plc Okpara Avenue on the adequacy of human and non-human resources for implementation of computer installation.

1.8 Definition of Concepts

These are the definitions of terms used in the study.


Computer is an electronic device with in built programs which enable it to receive, store, process and procedure large amounts of data for the execution of a more range of arithmetic and logical operation.


Crime is any act of commission or omission believed to be socially harmful to a group and thus forbidden by the designated authority of that group under threat of punishment states another way or a specific element or act of human behaviour which vary in time and place which is considered repayment or harmful enough to be forbidden by the group and this subject to a penalty.


Criminal deception or act of manipulation of fund by criminal act.


Serving or designed to prevent, precautionary.


Person who steab, especially secretly and without violence

Chapter Five

5.0 Findings Conclusion and Recommendation

5.1 Discussion of Findings

Experience and views of people on he role of computer in fraud detection and prevention in banks prompted this research.

The views is that banks are being faced with fraudsters. Having realized this, the management introduced computer. But there are machine (ordinary) or First generation computers. Their output differs a lot and also the services they provided.

It is a happy thing to note that the objectives is to detect fraudsters and prevent them in order to retain and attract new customer, prevent damages computer fraud can cause.

Also I viewed that many staff prefer manipulated money to their main salary and by so doing they get involved in such act.

Also I viewed that any person that is a fraudsters would not want his/her name to be heard everywhere.

5.2 Conclusion

In conclusion, the use of computer in the banking sector is highly encouraged even though some people still use it to perpetrate their evil doing. The advantages of better management, ease of transaction, non manipulation of dormant account, counterfeit and cost savings devices of computer are being reaped by the banks to great extent.
It should also be noted that customers form the growth and development of the banking industry. Maintaining the standard of this project would ensure that all customers under these services receives the same quality services they expect and deserve. The bank that have the necessary material and human resources to maintain a computer department should see it as the introduction of preventive measures to improve he security consciousness of the banks to detect fraud.

Prevention measures includes god security devices, adequate management team, good internal control and staff remuneration which can be reaped by the bank to a great extent.

The bank as a financial institution should have the necessary material and human resources to prevent and detect fraud.

5.3 Recommendation

I will strongly recommend that banks should include restriction of access to their computer system as well as ensure that input to the computer and data files is restricted by user-ID. Also business institutions should create separate data control and data security section for their input and output control. Charges and modification should be authorized and documented First, to guide against excesses of programmers.

Copies of important data should be kept within sight and management efforts should be geared towards checking the internal audit department’s system log on a daily basis. It is necessary that bank management should get necessary training on computer security.

Since the prevention and detection of fraud in financial institution will induce customers to rely on their banks and continue that patronage and the researcher recommends that the bank should continue to improve more on the preventive measures as this will attract more customers thereby leading to increase of profit bases of the bank.

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