A study on the influence of Information Communication Technology (ICT) adoption on bank fraud in Kenya

Abstract

Fraud can be seen as the deliberate distortion, dissimulation, or exclusion of the facts for the sole purpose of financial disadvantage of an individual or an organization which also includes embezzlement, theft or any attempt to steal or unlawfully obtain, misuse or harm the asset of the bank. It is a big challenge in today's businesses. Frauds in Kenyan banks only prove that financial freedom aggravates the inherent tendency of shallow markets to foster excessive speculation and worsens the systematic consequence of such unsubstantiated activity. Revelations of electronic fraud, evidence of insider trading and consequent collapse of investor interest have led to an almost unstoppable downturn in Kenyan banks. Bank frauds concern all citizens. It has become a big business today for fraudsters. This study seeks to investigate the effects of ICT adoption skills in relation to the increase of bank fraud in Kenya. The target population was the senior staffs in the five big commercial banks in Kenya, working at the headquarters in Nairobi. The research focuses on the top and middle level management staff who are directly dealing with the day to day management of the institution. The study also proposes a hybrid model to scale down the impact of this type of fraud by using a strategic fraud detection model which combines both deductive reasoning and technology to provide a more effective way to detect fraud. The second model is the IT Risk Assessment Model. This uses a comprehensive IT risk assessment process to evaluate the use of technology to identify appropriate compensating controls, while the IT audit evaluates the compliance and adequacy of these controls. The model has been tested through a panel of thirty experts within the banking sector. The results of the testing were positive.