Information Systems Innovations and Financial Fraud in Commercial Banks in Kenya

Abstract

financial fraud in commercial banks in Kenya. The objective of the study was to determine the relationship between the information system innovation and financial fraud .The study concluded that commercial banks had adopted various innovations including credit cards, RTGS, mobile banking, internet banking, insurance services, credit reference bureaus and Islamic banking. The population of study was all the 43 commercial banks in Kenya There was a relatively positive explanatory relationship between information system innovations and financial fraud among commercial banks in Kenya; the coefficients are significantly different from zero. The Correlation Matrix shows that there is a strong positive relationship between information system innovations and financial fraud with an association of positive .764. The relation between the bank characteristics and financial fraud was also positive at .781 while the relation between bank characteristics and information system innovations was also positive at .726.However there was a marked increase in occurrence of fraud in direct relation to the invention of more financial innovations hence there is need to ensure any new inventions are risk free and do not increase the vulnerability of commercial banks to fraudsters who are continuously evolving and becoming more sophisticated. The study suggests further research should be conducted in commercial banks to ascertain the most fraud prone innovation techniques and strategies. This could be extended to other financial institutions and industries within the economy that are rapidly adopting new cutting edge technologies