Information Technology Control and Fraud Risk Detection in Deposit Money Banks (DMBs) in Nigeria

Abstract

The banking sector has been considered as a fulcrum for economic growth in any country because of the intermediary role the banks play in collecting funds at interest from the surplus household and giving it out at a markup to the deficit household. The smooth operations of banks however had been faced with the risk of fraud which has led to the loss of a considerable amount of money running into billions of naira annually. This challenge had brought a bigger problem of how to properly manage the risk of fraud and boast customers' confidence in the banking sector in Nigeria and globally. Information Technology Control had been perceived to influence fraud risk management. Therefore, this study reviewed the effect of Information Technology Control on Fraud Risk Detection in Deposit Money Banks (DMBs) in Nigeria. The study employed the survey research design with a study population of 1,030 which comprised staff in the Internal Control, Internal Audit and Information Technology departments of all Deposit Money Banks (DMBs) in Nigeria as contained on the CBN website. The 13 listed banks were used as samples for the study and the Taro Yamane formula was used to obtain a sample size of 288. The purposive sampling technique was subsequently used in administering the questionnaire to the respondents. The reliability of Cronbach-alpha coefficients ranged from 0.864 to 0.952. Descriptive and inferential statistics were used to analyze the data. Similarly, the study showed that IT control has a significant effect on fraud risk detection in Deposit Money Banks (DMBs) in Nigeria with F287=30.690, Df = 3 & 265, adj. R2 =0.209, p-value=0.000< 0.05. The study, therefore, concluded that IT Controls have a significant effect on fraud risk detection in DMBs in Nigeria. The study, therefore, recommended that Banks should give priority to the implementation of information technology controls across all their digital channels or platforms as this will help to promote adequate fraud risk detection on the platforms and boost customers' confidence in the banking sector.