The use of ATM has grown rapidly in popularity because of its low banks transaction  costs and customers convenience which has made it a basic element of today’s financial service delivery. However, the ATM which is meant to be serving the customers better is now becoming a nightmare for some customers because of fraud perpetuated in their accounts through ATM withdrawals. The main purpose of this work is to examine the activities of fraudsters through ATM pin and how these frauds have affected financial institution growth and customers patronage of banks. This researcher made use of four banks as a case study for this research work. Data was collected from questionnaires, interviews and observation from the four banks under study. Three hypotheses was tested using the chi- square statistical tool and it was observed that there is a significant relationship between ATM fraud and fraud in Nigeria, it was also observed that ATM fraud affects customers patronage and financial institution growth. In conclusion, the activities of fraudsters needs to be monitored and measures should be put in place to mitigate these frauds. To solve this, additional security layer on the ATM is recommended and proper monitoring of the ATM machine by the banks. We believe that if banks and service providers heed to some of these suggestions in this work, we will have a safer, hassle- free and worth while banking experience in this country.



1.1 Background to the study

With the global use of progressively more sophisticated internet and information technology (Papazoglou, 2003), electronic banking is developing as a key channel for banking businesses (Wei et al., 2012). Globally, remote banking is regarded as a characteristic of the new economy, which involves electronic transactions between banks and their customers (Banstola, 2007). Electronic banking, generally referred to as ebanking, is the latest delivery channel for the banking system (Keivani et al., 2012). The term “e-banking” has been discussed in several ways by many researchers from diverse backgrounds, mostly because electronic banking involves quite a lot of banking activities through which customers can inquire for financial information and implement transactions by means of a digital television, telephone, mobile phone or computer (Hoehle, Scornavacca& Huff, 2012). Perkins and Annan (2013) describe electronic banking as the rendering of services and dissemination of information by banks to customers through various delivery channels that can be accessed with a personal computer or other electronic devices. However, the banking sector is being reformed by globalization, innovation, customer needs and competition. Due to the development of a knowledge-built economy and the emergence of the latest information and communication technology, financial institutions particularly the banking industries have experienced thought-provoking changes during the last decade. According to the Wisdom (2012), Information and Communication Technology, the most significant factor in the forthcoming development of the banking.