Are Banking Technologies Secured?

Banking sector has been a witness to many rapid developments in recent years. Lately, banks aim to digitally connect to their customers and adapt to the latest technological upgrades. As this happens, banks continue to work with non-financial institutions to get access to more digital improvements like biometric features and fingerprint scanning.

Access to online banking is now available through phones, laptops and even through banking wristbands. A large number of ways help in authenticating the identity of a customer. Banking wristbands actually identify the customers through their unique heartbeat. Once authenticated, they have access to your online banking without remembering any passwords. You can make payments with a touch or a tap on your phone. Many banks are allowing payments through twitter handles and interestingly, they do not need to be the bank’s customers. Banking never got this easy.

But as banks try to introduce more user-friendly technologies in the banking system, the need for a more protected banking keeps getting larger. Even though these innovations remain unique in their own way, the magnitude of associated risk still remains huge. Barclays CEO Antony Jenkins on March 24, 2015 raised some concerns regarding the rapid developments in the banking system. Even though Barclays is known for its innovative banking methods, the CEO was not hesitant in saying that banks are yet to feel the “full disruptive force” of technology.

While many banks focus on security and privacy, others only look at the profits and the aggressive competition they face. The banks will get more competitive once there is a pressure to catch up with one another in the technology race. But the truth is that in focusing on profits and digital innovation, they might put their customers’ privacy at risk providing access to frauds and hackers. With rising number of cyber crimes, security should be of utmost priority – above profits and digital innovation. New rules and regulations need to be brought in to address this issue so that disclosure of any personal information is not leaked. Series of cyber hacks need to addressed with highest concern so that they do not occur again. A UK banking report by British Bankers’ Association (BBA) addresses the issue of risks associated with withdrawals of large sums of money that is transferred to another account. Such digital payment methods could result in bank runs creating a bigger problem for the banks. Such huge transactions can affect the deposit base of banks and create trouble for banks.

Any suspicious activity within the bank accounts should be dealt with immediately so that there is no spill over effect on other accounts or banking networks. This holds true not only for banks, but also for institutions that deal with personal data of customers. Banks should perform random checks on financial transactions and cases of discrepancies should be reported immediately. As banks avail the various digital channels, they need to protect the interests of their customers. Innovating should happen with responsibility so that digital banking can make life simpler and easier for all ages of customers. As traditional banking breaks down and branchless banking gains momentum, it is important to build trust and security so that customer protection is not compromised.