Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Insecurity of Cash-Less Banking Transactions: An Empirical Evidence from Nigerian Banks

Author(s): Amara Priscilia Ozoji, Okoi Etim Iwara, Charity Nkeiru Ezuwore-Obodoekwe, Sunday J. Inyada, Beatrice O. Ezechukwu, Polytechnic Oko, Terkura Fella Ayem-Fella, Chidimma Odilia Ezuma, Lilian N. Ebisi, Kemdi Lugard Okoroiwu

This investigation primarily aimed at assessing cash-less banking operations since cash-less policy was introduced/implemented in Nigeria in the year 2012, with a view to determine the significance of its effect on insecurity of banking transactions in the economy. Ex-post facto research design and secondary sources of data collection were employed. The work studies the aggregate quarterly data (quarter 1-quarter 4, 2012 to quarter 1-quarter 4, 2019) of all the Deposit Money Banks operating in Nigeria as at 2012-2019 as contained in CBN statistics database and NDIC annual reports; summing up to 32 observations. Total quarterly volume of: automated teller machine transactions, point of sale terminals transactions, web transactions and mobile phone banking transaction were used as proxies for cash-less banking; while total quarterly: number of fraud and forgery cases in Nigeria’s Deposit Money Banks, amount involved in the attempted/reported fraud and forgery incidences in Nigeria’s DMBs and actual loss to fraud and forgery in Nigeria’s Deposit Money Banks were employed as proxies for insecurity of banking transactions. The study employed descriptive statistics to give the description of individual research variables and the inferential statistics, multivariate regression techniques of model estimation (Error Correction Model estimation and short-run, Autoregressive Distributed Lag model estimation) for data analysis/test of hypotheses which were preceded by Augmented Dickey-Fuller Unit Root Test and co-integration test using Autoregressive Distributed Lag bound testing technique. Findings revealed that the introduction of cash-less banking in Nigeria has not significantly affected the increased number of fraud and forgery cases in Nigeria’s Deposit Money Banks. It further disclosed that cash-less banking in Nigeria has significantly affected the increased amount involved in attempted/reported fraud and forgery incidences in Nigerian Deposit Money Banks. Finally, the results showed that the practice of cash-less banking in Nigeria has not significantly affected the actual loss to fraud and forgery in Nigerian Deposit Money Banks. The study concludes that the perception of most Nigerians that cash-less banking transactions are insecure is wrong; instead, cash-less banking is even more secure than the previously practiced cash-based banking system since the opportunity to actually commit the frauds (frauds reported as attempted amounts involved in fraud incidences) and inflict financial losses to banks and the victims was drastically minimized as revealed in the study’s results; only that there is need for more improvement on the security measures of some cash-less banking channels like automated teller machines (ATM) and internet. The study recommended that, Nigerian government should ensure the allocation of adequate funds for the establishment and equipping of special electronic fraud (cyber-crime) department within the policy force, and also training the Officers to serve under the department on the e-fraud policing. Banks’ Customers should keep their online and ATM transaction credentials (user ID, password, token/PIN) confidential. Also, Financial Institutions should ensure continuous review and security upgrade of its electronic platforms and services.

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