Mobile Banking Is More Secure Than Online Banking

Pro: Smartphone Tech Reduces Risks

by Pete Daffern

Mobile banking is on the rise, and chances are you’re one of the 52 percent of consumers who have accessed some form of mobile banking in the past six months. Yet perceived security risks remain a hindrance to full adoption of the technology. In truth, accessing your account via your bank’s mobile website or using your bank’s mobile app is as secure, if not more secure, than banking online via PC. Why?

People always know where their phones are: Studies by Morgan Stanley have shown that the average American (91 percent of those surveyed) has his or her cell phone within arm’s reach 24 hours a day. Think about the last time you lost your wallet or credit card. How much time passed before you noticed? Your mobile phone is always on and available.

Your mobile banking “identity” is tied to a specific phone: Done correctly, your mobile “identity” can be linked to a specific device, making traditional “man in the middle” security compromises much less relevant.

Consumers can mitigate fraud in real time: SMS (short message service) and push messages for smartphones allow consumers to help banks monitor for fraudulent transactions as they happen.

Geolocation helps curtail fraud: Smart mobile companies are leveraging the GPS capabilities of smartphones to stop fraud before it happens. If a physical credit card is used hundreds of miles from a phone’s location, for example, chances are that one or the other has been stolen.

Future biometric-based security: New smartphones are already being released to leverage this sort of capability. The newest version of the Android mobile operating system, Ice Cream Sandwich, uses facial recognition technology to unlock a user’s phone. And Apple’s introduction of Siri on the iPhone is setting the stage for voice recognition capabilities to come.

Pete Daffern is chief executive officer of mobile banking solutions provider Clairmail, based in San Rafael, Calif.

Con: Your PC Is More Trustworthy

by Julie McNelley

While the mobile platform has many features with the potential to facilitate a safer remote-channel experience over time, today’s online channel typically offers more in the way of robust security. Much of this is the product of necessity: Online banking has been around a lot longer than mobile, offers more transactional capability (much of it higher-risk), and has been much more intensively targeted by malware and other cyberthreats. As a result, online banking platforms are typically more mature in their defenses than are mobile platforms.

Another factor that adds to the risk of mobile banking is consumers’ failure to treat their smartphones like tiny little computers. Few consumers have any form of anti-malware software on their mobile devices and, with little consideration for security, many are willing to download apps of completely unknown provenance from app stores.

Risk executives at financial institutions expect mobile banking to come under more intensive attacks as enhanced transactional capability is deployed to the mobile channel. Aite Group surveyed global risk executives in November 2011 to determine the extent to which they plan to bolster the defenses of the mobile channel over the next two years. Ninety-two percent of respondents expect to deploy increased fraud prevention technology. Sixty-seven percent have projects under way, and 25 percent are waiting to see what kind of threats emerge.

Mobile banking is viewed as a critically important strategic channel by most financial institutions. In order to ensure a secure experience for everyone, the protections must increase alongside the risks.

Julie Conroy McNelley is a senior analyst within Aite Group’s retail banking practice, covering fraud, data security, anti-money laundering, and compliance issues. She works with financial institutions, payment processors, and risk management companies, including Golden Gateway Financial and Early Warning Services.