Online Banking — How Safe Is It?

Internet banking has been around since 1995, when Wells Fargo Bank in the US added bank account services to its website, to enable its customers to bank remotely.

Since then, its popularity has steadily increased worldwide, with advances in digital technology improving its functions and ease of use.

As my career working for one of Australia’s major banks progressed, I have had a “ringside seat” to its expansion, and the reluctance of some clients, in particular a number in the 60 and over age group, to adopt it, fearful of its many unknown risks.

As the 1990s became the early 2000s, I witnessed many clients heading to the online banking kiosk in the branches I worked at, eager to learn the wonders of this time-saving marvel. As they tapped on the computer keyboard to check their balances and pay bills, they were watched by more hesitant types in the 15-customer-long queue, facing three mega-busy tellers. Many of these poor souls clutched cheque and deposit books, the banking tools of yesteryear.

I was curious about the cringing fear that would overtake some of my older clients when I attempted to explain the benefits of online banking. I even went as far as asking them why they were reluctant to explore this time-saving mobile banking tool, only to be met with fearful gazes and attempted justifications like “If I use it, my accounts will be hacked into and all my money drained out”.

I tried to allay their terror with explanations such as “I have worked for this bank for 25 years, and not once have I met a client who was using online banking correctly and their accounts were hacked” and “Although I cannot absolutely guarantee its safety, this bank has many safety features on its internet banking”.

This had some success, but my attempt at soothing resulted in glazed looks and a few “Thank, you, dear, but no”, after which the clients then re-joined the teller queue, which by now had grown to 25.

This led to me wondering… how safe is online banking really, and what are the bank safety features built into it?

Online Banking Anti-criminal Features

I began to feel that these nervous clients, rather than wake at 2:53 am having an intense sweaty nightmare involving the above individual eying off their hard-earned money online, should familiarise themselves with the safety features that banks worldwide are adding to their internet banking.

There are also precautions that clients can take to protect themselves from online harm.

These safety features include:

A limit on the amount that can be transferred to an external account per transaction, and also per day.

Two-factor authentication. This means that a text message is sent to the mobile number registered on online banking whenever a transfer is made to an external account. This text message usually contains a number code, which the user of online banking must input before the transfer is successfully made. Thus, the person attempting to transfer funds elsewhere must also have the online banking’s owner’s mobile to successfully shift money out.

Some mobile banking platforms use a 4-digit code, thumbprint, or facial recognition as an added security feature. This makes it difficult for a thief, who has stolen your mobile phone, to also access your mobile banking.

Strong encryption of customer data and continuous monitoring of accounts to ensure their safety.

In the US, banks must report a data breach to regulators if that breach has the potential to affect their banking operations.

There are also some important tips on how to protect your online banking:

Be very careful when using public wi-fi, as many of these are unsecured, potentially exposing your laptop or phone to online snooping, such as “man-in-the-middle” attacks, in which criminals on a laptop or phone nearby can electronically “look in” on your online activity, including banking sign-ins. If you have to access mobile banking in public Wi-Fi areas, take precautions such as disabling file sharing in your system’s settings and ensuring that your mobile banking page has a black padlock before the URL in the browser. This means that the page is authentic, not a fabrication constructed by scammers.

Some banks offer alerts by text or email whenever an attempted sign-in on a new device has been detected, the online banking password has been changed, or the external transfer limit has been increased or decreased. They also notify you if failed logins have been detected.

It is wise to enable notifications on your mobile banking app — this notifies you whenever a transaction from any of your accounts and credit cards has been made.

Choose strong passwords for your logins — these shouldn’t contain consecutive numbers such as “1 2 3 4” or your name or date of birth. These are easy for would-be criminals to guess. Try to use “special characters”, such as “% or #” if your financial institution allows these.

In Conclusion…

I have noted that more and more “older” clients have now embraced the world of online banking, and are now aware of the above bank safety features.

When I encountered hesitation, I also tried to reassure my clients that if online banking posed nightmarish risks, why do banks so actively promote it, and risk their reputations in the process?

I also noted that approximately 95% of my hesitant clients were active users of emails and social media, which exposed them to a world of eager scammers, their eyes on their unsuspecting bank accounts.