Shrinking sizes and expanding prowess, mobiles promise a great deal: calling, dating, job-hunting, working, and…banking. As a result, these portable powerhouses have irrevocably changed lives, corporations, and consumer behaviour.
A greater demand for easy, all-around access to products and services has steered technological and communicative developments. So, a significant result has been the advent of mobile banking.
This result has proposed a solution to meet customer demands and overcome geographical limitations. However, managing money on the move is not always a utopian situation, and it is fraught with risky security gaps.
Below, we take you through the most common risks that come with mobile banking and how to mitigate them.
Risks Associated With Mobile Banking
Although it has an attractive and straightforward exterior, mobile banking leaves all involved parties vulnerable to several security breaches.
These are due to security measure failures at multiple points, right from the user, through applications, to bank regulations. Some common risks include:
1. Data vulnerability
Mobile banking runs on data: susceptible, personal data that journeys through public networks, bank servers, and personal devices, each with varying levels of security.
Data is extremely vulnerable, and its safety depends on secure storage, robust authentication and controls. Unfortunately, these controls and detectors can be circumvented, leading to disastrous data and identity theft.
2. Malware risks
Malware or malicious software is scammers’ preferred weapon to disrupt user systems and extract information without the user’s knowledge.
It functions on the premise of being hidden enough to steal data and credentials quietly, whether in the background of apps or as a hidden app itself.
The scope and complexity continue to increase and become more worrying due to new, targeted approaches (ad specific frauds, phishing emails tailored to user preference, etc.).
3. Poor app security
While mobile banking applications are considered much more secure than browsers for accessing banking services, apps are still not wholly immune to cyberattacks, fraud, and money laundering attempts.
Poor security measures and insufficient technological tripwires could result in many stolen credentials and unauthorised transactions.
4. Unsecured Wi-Fi and data networks
Along with the ‘anywhere, anytime’ perks that mobile banking offers come the genuine possibility of ‘anywhere, anytime’ scams.
Using free, public networks to conduct bank work can prove fatal since scammers often prey on unassuming people looking for free Wi-Fi. In addition, parallel, unsafe Wi-Fi networks may be set up close to the authentic network and are used to steal data and credentials when people log in to their bank portals.
Also read: How does FaaS Help with Fraud and Chargeback Prevention?
How Can These Risks Be Mitigated?
In order to ensure the best possible financial health and security for all parties involved in mobile banking, vigilance and proactivity are required from everyone involved:
1. Risk anticipation and audit conduction
While it is ideal to spring promptly to react to security issues that may arise, preventive measures are equally important.
Consistently anticipating risks, building counteractive measures to breaches, and conducting software audits is good practice in ensuring mobile banking safety.
Some points to keep in mind include:
- Identifying sensitive data, and developing appropriate protective measures.
- Identify possible weak points in data transfer systems and then plug these holes.
- Securing APIs.
- Implementing robust authentication and verification protocols.
- Securing credential processing.
2. Regular application updates
Even though developers have ensured that mobile banking apps are relatively watertight, those seeking to indulge in unsavoury criminal activities will always find a way to bypass security measures.
Subsequently, the regular testing of apps, identifying bugs, debugging, and troubleshooting is all ways of upping security. Take, for example, the auto log-off facility or even the implementation of the OTP system.
These are prime examples of app updates being the best way to strengthen the gatekeeping protocols.
3. Multifactor authentication and data encryption
Piggybacking off the gatekeeping analogy from above, it’s helpful to note that even the front doors in homes today have at least two locks. Why? Anticipating the increased risk of break-ins and acting accordingly.
The same goes for mobile banking. One ‘gate’ simply isn’t enough anymore. With frauds and hacking becoming more sophisticated, it is unwise to think the old ways of inputting a password will keep scammers at bay.
Implementing multi-factor authentication (a combination of fixed passwords, one-time passwords, biometrics, etc.,) and strong data encryption will significantly lower the risks associated with data and credential theft.
4. Unmistakable brand identity
The risks associated with mobile banking are elevated, especially when scammers have preyed on unassuming users that innocently download fraudulent apps instead of the real thing.
This poses a real issue to both end customers and banks, both in terms of security and public image and perception. However, cultivating strong brand awareness and unique promotional campaigns are an excellent way to make sure users can quickly identify the real thing from a counterfeit.
5. Customer education
Given that the responsibility for safely accessing mobile banking sites lies equally between users and financial institutions, it is important to ensure that customer bases are well-informed.
Hence, customer education efforts are of the utmost importance. This could be done through a series of promotional and educational campaigns or even simply through a detailed FAQ section.
The idea is to provide users with risk prevention recommendations and solutions for cases where customers have already been victims of these risk factors.
The Bottom Line
Financial institutions certainly cannot deny the utility of mobile banking and the fix-all salve it has become to issues that plague the financial sector. However, they cannot escape the glaring security concerns that never seem dull.
The only way forward is for financial institutions and consumers to remain vigilant and plug holes where necessary and possible.
Finezza provides top of the line loan cycle management technologies and helps financial institutions stay one step ahead of the competition by optimising their lending lifecycles. Contact us today to know more!