Curbing Fraudulent Activities in Deposit Money Banks: The role of Blockchain Technology in Nigeria

Adegboyega R. Afolabi; Modupe M. Adesemowo; Olayemi O. Amosun; M. Olamide Otuyelu; Solomon O. Okunade; Mukail Akinde

doi:10.58709/niujms.v12i1.2375

Adegboyega R. Afolabi Chrisland University, Abeokuta, Nigeria
Modupe M. Adesemowo Chrisland University, Abeokuta, Nigeria
Olayemi O. Amosun Chrisland University, Abeokuta, Nigeria
M. Olamide Otuyelu Chrisland University, Abeokuta, Nigeria
Solomon O. Okunade Chrisland University, Abeokuta, Nigeria
Mukail Akinde The Federal Polytechnic, Ilaro, Ogun State, Nigeria

DOI: https://doi.org/10.58709/niujms.v12i1.2375

Abstract

As digital intermediation accelerates, Nigerian deposit money banks (DMBs) confront rising cyber-enabled fraud since the launch of Bitcoin in 2009, despite ongoing reforms. Most blockchain research still centres on cryptocurrencies, with relatively few studies examining their applications in other industries. This study investigates whether blockchain technology (smart contracts, permissioned distributed ledgers, and secure digital wallets) is associated with lower fraud in Nigerian DMBs.Using survey data from 120 bankers across five institutions spanning international, national, and regional licenses, we estimate Ordinary Least Squares (OLS) models relating each BCT dimension, and a composite index, to two outcomes: spread of fraud (SOF) and internet fraud activities (IFA). Reliability analysis shows strong internal consistency (α = 0.75–0.91). Models include robustness checks for multicollinearity and specification. Results indicate that higher perceived deployment of smart contracts, distributed ledger, and digital wallet capabilities is negatively and significantly associated with SOF and IFA; a composite BCT index positively predicts overall fraud-reduction assessments. These findings align with recent sectoral evidence that blockchain adoption lowers fraud-related costs and enhances transaction integrity in banking. Given Nigeria’s elevated incidence of electronic fraud in retail payments, the practical implication is that embedding programmable controls, tamper-evident shared records, and cryptographic authentication can harden high-risk processes. We recommend that regulators and DMBs advance permissioned BCT pilots integrated with Anti-Money Laundering (AML) and Know Your Customer (KYC) workflows, strengthen reporting standards, and build human-capital readiness. Beyond cryptocurrency, enterprise-grade BCT offers credible pathways to reduce fraud externalities and improve operational resilience in Nigeria’s banking sector.

Keywords: Blockchain; Smart contracts; Distributed ledger; Digital wallet; Bank fraud; Nigeria.