Mobile banking is revolutionising ways for people to access their accounts, thanks to its ease of use and flexibility. Consumers can deposit cheques, pay bills, transfer funds between accounts, and even send money to persons or businesses anywhere in the world using virtually any device with an internet connection.
Unfortunately, this transformation in accessibility and convenience has opened up new opportunities for fraudsters aiming to take advantage of vulnerabilities in business and consumer accounts.
As banks open up more avenues for their clients to access their money more quickly, the likelihood of fraudsters using those channels increases.
That is why both customers and financial institutions want practical answers regarding fraud protection. Therefore, it is critical to adopt the core tactical methods that can provide the best protection from the beginning.
What is Mobile Banking Fraud?
The risks of mobile banking are similar to those of internet banking. Scammers have a range of techniques for obtaining customers’ personal and financial information, such as bank account information, via their phones. Smishing and third-party programs are used to do this (similar to phishing, but through text messages).
Types of Mobile Banking Fraud
Mobile banking fraud can be carried out in several ways. Among the most common methods are:
1. Network provider data breach
In this type of fraud, hackers gain access to telecom service providers’ systems and steal personal information from customers. Mobile banking is based on data: sensitive, personal data that travels via public networks, bank servers, and personal devices, all of which have different levels of protection.
Data is highly susceptible; thus, secure storage, strong authentication, and restrictions are essential. Unfortunately, these safeguards and detectors can be bypassed, resulting in irreparable data and identity theft.
2. Call centre fraud
During phone banking, customer care employees perform tests to identify the consumer before revealing account information. If a fraudster obtains these details, they can simply access any individual’s account.
3. App security
While mobile banking apps are far more secure than browsers for accessing banking services, they are vulnerable to cyberattacks, fraud, and money laundering operations.
Many stolen credentials and unauthorised transactions could stem from inadequate security measures and technological tripwires.
4. Malware risk
Scammers employ malware or harmful software to disrupt user systems and steal information without the user’s awareness.
It works on being undetectable enough to steal data and credentials in the background of apps or as a hidden application. However, the scope and complexity continue to grow and become more concerning because of the new, focused approaches.
5. Mobile phone theft
A stolen phone with no strong password or lock security is highly vulnerable to fraud, particularly if it has bank apps and all necessary financial information. Moreover, even a password-protected phone might be hacked and used for mobile banking scams.
What Can Banks Do to Prevent Mobile Banking?
Mobile devices now handle the majority of payment transactions.
As fraudsters become more adept and expand their scopes with mobile-specific and cross-channel attacks, mobile technologies have created complicated security concerns.
Here are six methods for detecting and preventing fraud in mobile banking:
1. Multi-factor authentication (MFA)
Implementing a robust multi-factor authentication mechanism during account registration is one of the simplest and most effective measures. Multi-factor authentication (MFA) that uses dynamic, one-time authentication codes significantly reduces the risk of account takeover.
Along with impersonating existing devices, the attackers can also activate new devices using the victims’ credentials in some situations.
Push notifications transmitted over an encrypted channel to a mobile app tightly linked to the user’s device during activation can prevent attackers from gathering and using SMS one-time passcodes to gain access to accounts or authorise payments.
Furthermore, using mobile devices’ hardware characteristics (e.g., Secure Enclave on iOS or Trusted Execution Environment / Secure Element on Android) makes stealing device identifiers much more difficult.
Biometric authentication (Touch and Face IDs or similar tech) combined with confirmation of a push notification would have added another layer of defence that can prevent these fraudsters.
2. Online activity logging and behavioural analysis
Normal behaviour can be identified, and anomalies such as access from foreign countries by monitoring the consumer’s mobile account access.
Monitoring internet behaviour is an effective fraud detection strategy that can be handled by AI fraud detection software. In addition, new fraud detection companies are also offering passive biometrics to tackle mobile fraud.
3. Monitoring for fraud and suspicious activities across many channels
The following are essential components of a fraud monitoring solution:
Enterprise view and fraud reporting is a feature that allows banks to combine data from different sources and channels to get a complete picture of a customer’s account and suspicious activities. Cheques, online account access, and electronic payments will all be included.
Machine learning, scores, rules, and alerts is a function that generates risk assessments for a customer account using advanced scoring models, customer profiling, and other fraud detection tools. Simility and IBM Safer Payments are two sophisticated transaction monitoring systems.
4. Consumer email and text alerts
One particularly effective fraud detection strategy alerts customers when their mobile device accounts have experienced unexpected activity.
If an electronic payment is made to a new payee, for example, the bank may send a text message to the consumer asking for confirmation that the transaction is authentic. This method has been shown to be beneficial in both preventing fraud and improving client trust.
5. Regular monitoring and cleaning of malware
Customers and even bank employees have been duped into clicking on websites that download harmful software onto their computers, allowing hackers to steal large sums of money.
This software infects a computer or mobile phone, allowing a hacker to watch keystrokes, see emails, grab screens, and steal valuable information that allows them to access finances. Therefore, banks must have the most recent security software to detect and remove this dangerous malware.
6. Using HTTPS for secure access
The HTTPS protocol allows for secure internet connections, assuring that users view the site they believe they are. It also encrypts all data to protect it from being stolen.
In addition, HTTPS protects users from ‘middle-man’ attacks that can lead to personal or financial information theft.
The Bottom Line
Finally, banks must take a layered approach to mobile banking fraud that includes:
- Strong customer authentication
- Server-side risk analytics
- Advanced mobile app security
- Mobile app shielding with runtime protection
All these protect their customers and institutions from adversaries’ continued evolution and innovations.
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