Effectiveness of fraud response strategies adopted by co-operative bank of Kenya limited

Abstract

Fraud is among the greatest challenge facing organization today, If not well managed; it may lead to their downfall. Fraud in banking sector has been attributed to advancement in technology and weak internal controls. The objectives of this study were to identify the types of fraud, response strategies and the effectiveness of the response strategies to fraud at Co-operative bank of Kenya. Previous studies on this topic of fraud established that strict internal controls assist to detect, prevent and control fraud in institution. Various strategies such as risk monitoring, Internal audit and staff screening, are currently being used to manage fraud. At the time of the study, no local or international studies had ever been done on effectiveness of response strategies to fraud adopted by commercial banks in Kenya, thus there was a need to carry out this study. This was a case study aimed at getting detailed information regarding effectiveness of responses strategies to fraud at Co-operative bank of Kenya. The primary data was collected using an interview guide. The interview guide contained open-ended question that enabled the researcher to collect in-depth qualitative data. The interview data was examined for completeness and consistency after which it was analyzed using the content analysis method. The information was presented in a continuous prose. The researcher interviewed all the six proposed managers making a response rate of 100%. The study concludes that ineffective strategies cannot adequately control fraud, managing the risk of fraud will ensure growth, customer confidence and security for the bank. The study recommends that commercial banks must examine each response strategy for effectiveness and develop, modify or discard those that are not effective. The study also recommends reforms in the police and judiciary, enhancement of security features on key identification documents, staff motivation and whistle blowing.