DISSERTATION PROPOSAL: IMPACT OF ICT ON BANKING FRAUD

Published: 2017-08-21 11:15:34
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Harvey Mudd College
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Dissertation proposal
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Introduction

In the 21st century, the financial institutions have expanded in a great way. The number of banks in every city has almost increased 15 times than it was 50years ago (Rakoff 2001, p.3). In the present age, a bank account has become a necessity for any transaction ranging from payment of services, and products. The 21st century, the employers have scrapped the old mode of payment of salaries through cash (Charlton and Taylor 2004, p.45). However, just as the banks have continued to expand, the challenges regarding the safety of transactions have also increased. Banking transaction frauds have become the order of the day, supported the integration of technology in the banking system. This proposal paper shall discuss the impact of information and communication technology on the banking fraud and the present and future of occurrence of frauds within the banks.

Research Rationale

Moving forward the level of bank fraud cases is expected to rise, given that current measures have failed to secure the system. The dynamic integration of the banking system with the internet, which has transferred banking halls into personal laptops, phones, and other gadgets, poses a threat to the security of the bank's transaction. Therefore, the permanent solution to most of the forms of frauds lies on the innovations of anti-fraud tools to manage the current insecurity. Cryptocurrency, which is a new digital and virtual currency that uses cryptography for security, has a chance to fix the occurrence of frauds. This research emphasizes the relevance of ICT innovations in banking to counter frauds and the current insecurity.

 Description

There are various forms of transactions frauds in banking. However, the world of banking has been facing four biggest frauds now and then. These fraud threats are electronic fraud, identity theft, credit or debit card fraud and cheque fraud.Credit card and debit card fraud is a crime whereby your card can be reproduced to use the credit balance to obtain a financial advantage. These kinds of fraud occur in some ways. First, it can occur when the information contained on the magnetic strip is reproduced (Rakoff 2001, p. 10). The information concerning the transaction details of a particular account is stored in the magnetic space attached to the debit or credit card of the holder. These capturing of the information enables the holder of the card to transact in different banks or ATM outlets and other card receiver system with ease. Secondly, credit or debit card fraud can occur when the card is lost or stolen and finally used by a third party to transact, such as purchasing goods and services or withdraw of cash (Rakoff 2001, p.14).

Check fraud refer to the use of a cheque top get monetary benefits against the wish of the checkbook holder. This form of fraud can occur in several ways such as altering the cheque amount without the consent of the cheque holder, and theft and alteration of cheques (Rakoff 2001, p.20). The advancement and frequent use of the internet by individuals have led to the emergence of the electronic fraud. The ability of the internet to convert the whole world to a global village has improved online traffic (Marley 2011, p.34). As a result, customers of banks end up receiving impersonating emails that end up requesting their login details for the improvement of the banking services. Through, these replies, the emails obtain login details to access the bank accounts of the people that respond to their emails (Marley 2011, p.37).Identity theft is the other major form of fraud, which occur without the knowledge of the victim. Identity theft occurs when personal details of the bank account holder are obtained and used for benefiting a third party (Olojo 2006, p.33).

Current methods

The bank in the past years has heavily invested in the methods of combating forms of frauds. To prevent credit or debit card frauds, and electronic frauds, the banks have tried to enroll sensitization campaigns. The campaigns through fliers, billboards, commercials and road shows, have tried to insist on ways of preventing frauds. The bank has over time urged members to memorize their login details rather than writing the details on a piece of paper. Also, the bank has installed standby cameras in ATMs and other money outlets, which help in identifying the personal involved in the case of a fraud report (Olojo 2006, p.45).

The potential for the occurrence of a fraud in a bank has been dynamic. The factors that acted as red flags a few years ago have failed to detect the frauds due to happen in the banks. These have as result called for the measure in monitoring the usual and the unusual happenings in a bank system. Moreover, the prediction of rare events, which may provide a chance for fraud to take place has been useful in combating the vice (Olojo 2006, p.67). In addition, data mining and statistics help to anticipate and detect fraud. The methods enable the bank to search through millions of transactions to spot patterns and detect fraudulent transactions.

Proposed methods

The modern bank despite using the present fraud detection methods, it has continued to experience unaware cases of frauds (Machiraju 2008, p.87). Therefore, to cab the fraud, new measures have to be adopted by the 21st-century bank. These new measures include:

 The installation of standby cameras on the ATM and money outlet such as banking halls has failed to recognize the fraud performed by third parties. The bank should restrict the users to operate the ATMs with their faces uncovered (Machiraju 2008, p.88). This will allow the camera to capture the facial details of the third party. For a quick match of the facial the other identification details of a suspect, the bank should collaborate with the security agencies. The agencies have access to powerful identification machines, which can help in determining the suspect's whereabouts in a shorter period.

Research Aims and objectives

Aims

 To analyze the impact of ICT on banking fraud

 To develop effective measures to counter the problem such as developing alternative payment methods

Objectives

 To evaluate the effectiveness of ICT tools and devices such as cameras on ATMs to recognize fraud performed by third parties.

 To discuss the current banking transaction frauds

 To develop measures to be adopted by 21st Century banks to cab banking frauds.

 Suggest alternative methods of payment

Research Methodology

Research Methodology involves a framework of data collection methods that will be used in the research. In this phase data will be collected using a structured questionnaire with open-ended questions that require responses and also close ended questions providing options.

Research Design

The approach used in this quantitative research will focus on respondents answering the questions how, when, why, and what. In addition, the approach will, however, not manipulate variables in any way to influence the outcome of the research.

Data Collection

For accuracy purposes, primary data will be collected using an online survey design and interviews will be designed to assess the impact of information and communication technology on banking fraud. The research will also use descriptive design to understand more the implications. Respondents will be asked to rate on a 5-point Likert scale the impact of factors such as government policy and review of the current system. .

Deliverables

Outline of Final Report

The table of contents page

Chapter 1: Introduction

This section will argue for the need and rationale to do the study and will include;

 Background on ICT and its impact on banking fraud

 Statement of problem

Chapter 2: Literature Review

The gap in the literature exists on the impact of ICT on banking fraud. The literature review will include;

 Theoretical framework

Chapter 3: Methodology

This section will discuss why the methodology selected is the convenient approach to the research

 The rationale for the overall research approach

 Data collection procedures as proposed

 Data analysis

 Ethical considerations

Results

Discussion

Recommendations

Conclusion

Bibliography/ Reference List

Appendices

Reference List

Charlton, K. and Taylor, N. (2004). Online credit card fraud against small businesses. Canberra, A.C.T.: Australian Institute of Criminology.

Leinonen, H., Lumiala, V., and Sarlin, R. (2002). Settlement in modern network-based payment infrastructures. Helsinki: Bank of Finland.

Machiraju, H. (2008). Modern commercial banking. New Delhi: New Age International (P) Ltd., Publishers.

Marley, D. (2011). Modern piracy. Santa Barbara, Calif.: ABC-CLIO.

Olojo, A. (2006). Curbing fraud within the banking system. Ikeja, Lagos: Bolabay Publications.

Rakoff, D. (2001). Fraud. New York: Doubleday.

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