The influence of cyber security on financial fraud in the Nigerian banking industry

JACOB OBAFEMI FATOKI *

Department of Accounting and Finance Lead-City University Ibadan Nigeria.
 
Research Article
International Journal of Science and Research Archive, 2023, 09(02), 503–515.
Article DOI: 10.30574/ijsra.2023.9.2.0609
Publication history: 
Received on 21 June 2023; revised on 28 July 2023; accepted on 30 July 2023
 
Abstract: 
The study looked at Financial Institution in Nigeria for how cyber security affects financial fraud in Nigerian banks. The study focused on the following topics: the types of electronic frauds committed in the banking industry, the reasons why cyber fraud occurs in banks, the difficulties in preventing cyber fraud in banks, the impact of cyber fraud on Nigerian banks, and potential solutions for preventing cyber fraud in banks. The two hypotheses that the study is based on. Six Nigeria Banks made up the study's population, which used a survey research design. 557 bank employees were sampled using multistage sampling techniques. The bank staff's responses were gathered using a structured questionnaire, which was then, analyzed using the SPSS statistical package for social science version 27. Descriptive analysis was used to analyze the objectives, and multiple regression and Kendal Tau B were used to test the hypotheses. The study's findings indicated that computer viruses, hacking/cracking, phishing, pharming, and accounting fraud by bank employees were the main types of cyber fraud in the banking system. The causes of cybercrime in banks included a lack of line manager or senior manager oversight on deviations from existing electronic processes or controls, current business pressure to meet set targets, collusion between employees and outside parties, insufficient data encryption, the use of third-party services, and parodying. Similarly, the study's findings showed that the challenges impeding the effort to stop cyber fraud in Nigeria's banking system included a lack of standards and national central control, a lack of infrastructure, the internet's vulnerability, a lack of national functional databases, and inadequate awareness by bank customers. A security audit, antivirus and antimalware software, the use of multi-factor authentication, the use of biometrics, and automatic logout were found to be solutions to cybercrime in banks. The findings also showed that financial loss, decreased productivity, and vulnerability of banks' Information and Communication Technology (ICT) systems and networks were effects of cybercrime on banks in Nigeria. According to the study's findings, banks' cyberspace security cannot be overextended in Nigeria, so necessary precautions should be taken to reduce cybercrime in Nigeria Banks. The study recommended that Nigeria Banks implement stringent measures to monitor staff activities, particularly in the confidentiality of customer information, cyber security audit be performed by financial institution regularly, sensitization of bank customers, and Multi-factor authentication, biometrics and automatic log out, and strong firewall should be adopted by Nigeria Financial Institutions. 
 
Keywords: 
Nigeria financial institutions; Bank Customers. Cyber Security; Cyber Fraud
 
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