Not so very long ago, attending to your personal banking business was typically quite a pain in the assets. Routine banking chores—deposits, withdrawals, etc.—meant that you had to go to the bank, stand in line, and wait patiently (or not!) for the services of a bank teller—yes, a real human being that would assist you with whatever banking chores you needed to get done.
Things improved a little when Automated Teller Machines came along. You still had to drive or walk to an ATM, and more likely than not, still stand in line to complete your banking business. But there were far more ATMs than banks, so it was quite probable that an ATM was located conveniently close to your home.
Next came the drive-thru ATM. You could complete your banking business without even getting out of your car! But, it wasn’t really an improvement; you still had to drive to the ATM; and you probably still had to wait in line—though at least you could do so from the comfort of your car, with your air conditioning and radio blasting.
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The Bank in Your Pocket
Things have certainly changed. Banking customers no longer must go to a bank, or even to an ATM (unless they need cold, hard cash). Most banking customers now carry their accounts in their pocket, purses, briefcases, or backpacks.
These days, all you need to complete most banking chores is a mobile phone or tablet. Pull up the mobile banking app on your device and deposit checks, transfer funds, make payments, open or close accounts—just about everything you once had to stand in line to do.
It’s a seemingly miraculous byproduct of modern technology. It makes a once onerous, time-consuming chore astoundingly fast and easy. And that’s why a recent survey by the U.S. Federal Reserve revealed that more than half of mobile phone owners accomplish at least some of their banking using a smartphone app.
But, the big question today is this: Is mobile banking safe?
A Cloud to that Silver Lining
The Federal Reserve survey referenced above indicates more than half of all mobile banking customers fear mobile banking is not secure. Those concerns are not ill-founded. According to American Banker, approximately 25,000 Trojans (malware disguised as legitimate software) were on the prowl for mobile banking customers/victims in 2015.
Though many consumers are worried about the security of mobile banking, those same risks provide plenty of cause for concern among banking management. Each customer compromised through a mobile banking security glitch represents the potential loss of a customer, loss of goodwill, and a PR black eye.
Additionally, banking customers aren’t the only targets of cybercriminals; banks themselves are frequently the targets of fraud attempts. A recent study found that nearly three of every four banks were victims of fraudulent mobile app check deposits—and fraudulent deposits cost the industry nearly $2 billion in losses in 2014, according to the American Bankers Association.
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5 Tips for Fighting Mobile Banking Fraud
Banks deploy a number of techniques designed to diminish the threat of mobile banking fraud. Some of the most effective defenses include the following:
- Multi-Factor Authentication: Requiring the submission of a single password before granting access to a customer’s account is a defense methodology that’s easily foiled. Multi-factor authentication adds a layer of defense by requiring that the user submit something in addition to the login password. A few examples include:
- Specially generated one-time passwords
- Biometric IDs such as a fingerprint
- Facial recognition scanning
- Email and Text Alerts: Real-time notification of account activity can alert customers to fraudulent actions committed against their account.
- Behavioral Analysis: Software that monitors and analyzes logins and online account activity can flag behavioral anomalies for further investigation.
- Secure Access: Securing connections through technologies such as HTTPS can help to protect against both fraudulent logins and data theft.
- Fraud Awareness Education: Educating customers to the risks of mobile banking fraud can help to reduce carelessness that exposes both the bank and the customer to risk.
Between a Rock and a Hard Place
Many financial institutions find themselves between the proverbial rock and a hard place these days. On the one hand, customers crave the convenience of mobile banking, and banks that don’t offer that convenience are likely to find their customers looking elsewhere. But on the other hand, the convenience of mobile banking comes with an inherent increase in risk to both banks and customers.
The challenge, of course, is to stay a step of ahead of cybercriminals in offering a secure and convenient customer experience through the technological marvel of mobile banking. After all, nobody wants to return to the days of patiently standing in line just to deposit a check.
The move toward banking mobility is a recent innovation, but many financial institutions are struggling with problems such as outdated legacy systems — and find themselves falling behind the competition in their ability to offer quality, cutting-edge services to their customers. Read how the largest credit union in Colorado modernized their IT infrastructure in just eight weeks.