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Remember when mobile banking meant visiting your local branch? Today it means being able to make balance inquiries, deposits and account transfers with just a few taps on your smartphone. And that’s just the beginning.
“The scope of mobile banking has clearly expanded over the last 18 months,” said Sonia Lalli, a mobile banking analyst at Juniper Research, “particularly because of the expanded and more intelligent capabilities offered by the smartphone, as well as a greater range of affordable non-iPhone devices.”
However, transferring such sensitive data over the airwaves involves risk, and you should heed the dangers before you dive in. Here’s what you need to know about mobile banking and how to protect yourself.
What is Mobile Banking?
Simply put, mobile banking is doing everything you’d do at a bank (or on your home PC) from your smartphone or tablet. That includes deposits, withdrawals, account transfers and balance inquiries. These actions are done via SMS texts, a Web browser or a smartphone-based app. Since not all institutions have all three distribution methods, the ones that banks choose to support depend largely on the markets in which those money managers operate. For instance, financial institutions in developing markets generally will begin with SMS, a technology likely to be enabled even on lower-end feature phones.
Another technology has seen a lot of growth, Lalli notes. “Using apps is an increasingly more important way of doing mobile banking, with the included functionalities being increasingly enhanced,” she said. There’s pressure on financial institutions to offer apps on a variety of smartphone platforms and tablets in order to reach a larger number of people.
Right now Bank of America, Capital One, Chase, Citibank and Wells Fargo feature rich banking apps, and they’re just a few in a growing field of choices. Most of the services these institutions offer are similar across the board: Users can quickly check their balances, view account activity, pay bills, make transfers and locate nearby ATMs and banking center locations.
But some banks are pushing the envelope. For instance, the Chase Mobile app lets users scan and deposit checks using their smartphone’s camera. They can also transfer money between two Chase accounts for instant payouts.
The Common Threats
Despite advancements in the sector, mobile commerce has not expanded as fast as expected. Security concerns are the main reason.
“This rapid development in mobile commerce means that storing more potentially sensitive data on a phone makes it more likely to attract a cybercriminal’s attention as a target for hacking or breaching into,” explained Nitin Bhas, a Juniper Research analyst who specializes in device security.
Bhas noted that increasing device sophistication accelerates the need for mobile security in several ways. “Hackers can gain access to sensitive information stored in the device such as account details or PIN codes used for mobile banking, transaction codes and credit card details,” he warned.
Some of the key dangers of mobile banking include device loss, phishing, malware and viruses and fraud.
Here’s what you need to know about each threat:
1. Stolen Smartphones
“The biggest security threat to smartphones is having them stolen or lost, and then not having any protection to hide or destroy the data stored in it,” Bhas said. Someone who steals a device gains access to unprotected data such as ATM personal identification numbers, mobile banking security codes, passwords and more.