Card Fraud Detection Techniques On Performance Of Commercial Banks In Nairobi, Kenya

ABSTRACT

Fraud is one of the major ethical issues in the card industry. The study sought to find out card fraud detection techniques on performance of commercial banks in Kenya. The main aim of the study was to identify the different types of card fraud, and, review alternative techniques that can be used in detection of card fraud. The study defines common terms in card fraud, highlights key statistics and figures. The study reflects on how returns in the banking sectors have been eroded due to card fraud; this has made management and Shareholders of Banks to complain to the central bank which in turn has led to commercial banks analyzing card fraud. The study is likely to have beneficial attributes in terms of cost savings and time efficiency to all the relevant stake holders. The application of the techniques reviewed in the study will minimize card fraud being one of the major factors affecting performance of financial banks. The objectives of the study includes: the effects of Strong Authentication detection technique, understanding the effects of advanced authorization detection techniques, analyzing the effect of Card Fraud Management Systems detection and finally understanding the effects of (PCIDSS) Payment Card Industry Data Security Standard Compliance detection techniques on bank performance. The study adopted the descriptive research design because it enabled the researcher to summarize and organize data in an effective and meaningful way. It provides tools for describing collections of statistical observations and reducing information to an understandable form. The target population focused on the 42 banks who are members of the Kenya debit and credit card association. The study used the census study on the targeted population. The researcher used questionnaires in collecting primary data. The quantitative and qualitative analysis was analyzed using both descriptive and inferential statistical analysis. Reliability of the questionnaire was ensured by chronbach alpha which was reliable and consistent in analyzing the responses of the questionnaires. Content validity was measured by using experts in the field of study to validate the instrument. To establish the strength of the association among the variables Pearson correlation coefficient and multiple regressions was utilized. The integrity and effectiveness of the model was assessed by considering the coefficient of determination and analysis of variance. The descriptive and quantitative measure was calculated using the Statistical Package for Social Sciences (SPSS) 17.The result of the study indicated a significant relationship between strong authentications detection technique on performance of banks with the study indicating any change in strong authentication technique affected the bank performance by 35.9%. The study also indicated that Advance authentication technique significantly affects bank performance any change on the technique affects bank performance by 45.8% positively. The study also concluded that Card Management system technique had no relationship with bank performance with the study indicating 0.999 as a figure which insignificantly affects the bank performance .The study also indicated that PCIDSS compliance system significantly affects Bank performance with a change of the PCIDSS compliance system affecting bank performance by 20%. In conclusion most detection techniques affect bank performance.viii Fraud is one of the major ethical issues in the card industry. The study sought to find out card fraud detection techniques on performance of commercial banks in Kenya. The main aim of the study was to identify the different types of card fraud, and, review alternative techniques that can be used in detection of card fraud. The study defines common terms in card fraud, highlights key statistics and figures. The study reflects on how returns in the banking sectors have been eroded due to card fraud; this has made management and Shareholders of Banks to complain to the central bank which in turn has led to commercial banks analyzing card fraud. The study is likely to have beneficial attributes in terms of cost savings and time efficiency to all the relevant stake holders. The application of the techniques reviewed in the study will minimize card fraud being one of the major factors affecting performance of financial banks. The objectives of the study includes: the effects of Strong Authentication detection technique, understanding the effects of advanced authorization detection techniques, analyzing the effect of Card Fraud Management Systems detection and finally understanding the effects of (PCIDSS) Payment Card Industry Data Security Standard Compliance detection techniques on bank performance. The study adopted the descriptive research design because it enabled the researcher to summarize and organize data in an effective and meaningful way. It provides tools for describing collections of statistical observations and reducing information to an understandable form. The target population focused on the 42 banks who are members of the Kenya debit and credit card association. The study used the census study on the targeted population. The researcher used questionnaires in collecting primary data. The quantitative and qualitative analysis was analyzed using both descriptive and inferential statistical analysis. Reliability of the questionnaire was ensured by chronbach alpha which was reliable and consistent in analyzing the responses of the questionnaires. Content validity was measured by using experts in the field of study to validate the instrument. To establish the strength of the association among the variables Pearson correlation coefficient and multiple regressions was utilized. The integrity and effectiveness of the model was assessed by considering the coefficient of determination and analysis of variance. The descriptive and quantitative measure was calculated using the Statistical Package for Social Sciences (SPSS) 17.The result of the study indicated a significant relationship between strong authentications detection technique on performance of banks with the study indicating any change in strong authentication technique affected the bank performance by 35.9%. The study also indicated that Advance authentication technique significantly affects bank performance any change on the technique affects bank performance by 45.8% positively. The study also concluded that Card Management system technique had no relationship with bank performance with the study indicating 0.999 as a figure which insignificantly affects the bank performance .The study also indicated that PCIDSS compliance system significantly affects Bank performance with a change of the PCIDSS compliance system affecting bank performance by 20%. In conclusion most detection techniques affect bank performance.