Impact of smart contracts and cryptographic security on fraud prevention in Nigerian deposit money bank

Abstract

Purpose: Cyber fraud and money laundering are growing threats to the integrity of operations in the Nigerian banking sector, which undercuts the confidence of customers. This study examined the influence of FinTech solutions specifically smart contracts and cryptographic security on fraud prevention in Nigerian deposit money banks (DMBs), in view of the increasing incidence of cyber fraud and money laundering in the sector. Methodology: The study adopted a quantitative research design, underpinned by the Technology Acceptance Model (TAM), agency theory, and control theory. A cross-sectional survey was conducted on 312 management and IT employees drawn from five selected DMBs in Lagos State. Data collected were analyzed using descriptive statistics and multiple regression analysis. Results and conclusion: The findings revealed that smart contracts have a positive and statistically significant effect on the prevention of cyber fraud (r = 0.408, p < 0.001), while cryptographic security exerts a strong and significant influence on the prevention of money laundering (r = 0.433, p < 0.001). The study concluded that these FinTech solutions are effective tools for enhancing fraud prevention and improving the security architecture of Nigerian banks. Implication of findings: The study implies that deposit money banks should prioritize investment in FinTech innovations, while regulatory authorities should establish supportive frameworks to facilitate their adoption, thereby strengthening financial security and restoring customer confidence in the banking system.