DIGITAL BANKING GOVERNANCE AND FRAUD PREVALENCE IN TIER ONE BANKS IN MOMBASA COUNTY, KENYA

Commercial banks play a key role in economic development by facilitating financial inclusion, management of fraud prevalence significantly contribute to the success of financial institutions and the entire economy. The rapid adoption of digital banking has transformed the financial sector, offering convenience and efficiency to the financial institutions and customers. Despite the evolution of digital banking, which has transformed conventional banking into a cashless economy via the Internet, it has created unprecedented fraud encounters in online transactions. This research focused on examining the role of digital banking governance on fraud prevalence in tier-one commercial banks in Mombasa County, Kenya as the main objective. However, explicit objective involved investigating the effect of quality management on fraud prevalence in tier-one commercial banks in Mombasa County, Kenya. Theories of agency and fraud triangle informed the literature of the study. The research utilized a descriptive design and analytical approach. The intended audience of 270 staff from 56 branches of tier one commercial banks in Mombasa County comprising of management, supervisory staff and office clerks were selected using a structured questionnaire. A sample size of 162 employees was utilized having arrived at using the Yamane formula. A stratified random sampling design was pertinent for the different sub-groups of employees in the Management, Supervisory team and bank clerks. Descriptive statistics of mean and inferential statistics that include correlation and multiple regression analysis was used in this research. Additionally, SPSS version 26 was used as the analytical instruments. The regression model for the study was Ordinary Least Squares regression equation. In addition, the data diagnostic of the multicollinearity, normality and heteroscedasticity tests were used. The analyzed data was displayed in tables. Besides, the research adhered to ethical standards by upholding confidentiality and integrity with approvals from the university. In view of the influence of quality management on fraud prevalence of Tier 1 commercial banks, concluded that quality management was statistically significant and hypothesis one was rejected (p=0.031<0.05). The study recommends the utilization of a strong Quality Management governance that will help banks manage risks, enhance customer trust, and drive business growth by ensuring data accuracy, security, and accessibility. Keywords: Digital Banking Governance, Quality Management, Customer Awareness, Regulatory compliance, Fraud Prevalence, Bank Staff Remunerations and Fraud Prevalence.