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News

Direct Service Demands Of Banking Clients Drives Increased Needs For Online Security

ValidSoft : 26 July, 2010  (Technical Article)
The trend towards greater worldwide uptake of online banking services is driving greater requirements on banks and security companies to provide a secure environment to prevent man-in-the-middle and man-in-the-browser based phishing attacks
A survey of 46 senior banking executives across 14 different countries has shown a distinct shift in the attitudes of retail banking customers post-recession. 83 percent of respondents reported seeing an increase in customers wanting more direct services including online, telephone and mobile banking. In addition, 59 percent believe customer loyalty has decreased and half state that average customer profitability has declined to 15 percent in the aftermath of the financial crisis. ValidSoft, an online banking and fraud specialist, believes that these shifting trends are set to present banks with significant challenges requiring them to make improvements in a number of areas.

Phil Hickman, chairman of ValidSoft, states that one of the first tasks banks should concern themselves with is enriching the functionality of online channels, "With an increasing number of customers wanting to use the internet as their channel of choice it is essential that banks can guarantee the security of online transactions. At present, online banking is vulnerable to sophisticated fraudulent attacks like Man-in-the-Middle (MitM) and Man-in-the-Browser (MitB). With more users taking advantage of direct services, incidents involving these attacks will increase leading to a further deterioration of customer confidence.

"The most flexible, user friendly and effective way of combating MitM and MitB is out-of-band, two-factor transaction verification. Utilising telephones, landline or mobile, allows many different types of transaction, such as payment, change of address or purchase of stocks and shares, to be conducted safely over the internet - any bank making the necessary changes required to ensure the security of users will be sure to see a positive impact on the bottom line and the loyalty of its customers.

"The survey also highlighted the increased price sensitivity of retail banking customers. By improving the security of online channels, banks will be able to encourage more people to engage with them via the internet, a move that can increase efficiency to such an extent that is possible to offer discrete pricing for the services transacted online.

"As average customer profitability decreases, improving efficiency should be a top priority. Once again fraud detection and prevention is an area where banks could make significant improvements. As an example, each year, hundreds of thousands of consumers have their credit cards blocked when they try to use them on trips abroad. This is because the systems used by banks often detect international use as suspicious activity, regardless of the legitimacy of a transaction. An incident when a card is blocked incorrectly is known as a false positive and the industry average for cross border transactions is nine out of 10 - meaning that for every 10 cards blocked by a bank, only one is actually fraudulent. This issue is both frustrating to consumers and costly to the banks. Utilising mobile phone technology and proximity correlation software can solve this problem, having a positive effect on both profitability and customer retention."
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