More than 63 million Americans bank online, and 78 percent are pleased with that way of transacting their business, reports the Pew Research Center. Given that momentum and high satisfaction rate, sooner rather than later, online banking will become standard. Within all demographics, including Baby Boomers, those accustomed to paper forms of checking and saving accounts are recognizing the benefits of maintaining them totally online.
For example, online banking programs frequently provide:
- Real time, that is 24/7, access to payments, deposits, and withdrawals
- Money saved from not having to snail-mail bill payments
- E-mail alerts for when checks clear and if a balance is low, preventing overdrafts and the charges for those
- The ability to link with personal finance software such as Quicken
But both those already online and those considering the shift from paper have concerns about security. The issue is what they can do to ensure that their checking and savings accounts are safe from con artists as well as snoopers invading their privacy.
What should reassure current customers and prospects for online banking is that banks have a great deal invested in their reputations for providing online customers security for both their funds and their confidential information. Therefore, as smart businesses, banks will always be state-of-the-art in terms of cyber security technology, policies, and procedures.
Unfortunately for consumers who want to know more about the bank’s online systems, those financial institutions keep most of that confidential, only sketching out the very basics of their approach on their websites. Too much information would, as the saying goes, “tip off the bad guys.” Users know the particular website is secure by the icon of a padlock or a key. If that icon isn’t there, then they should not proceed to register as an online customer.
Essentially there are two approaches to cyber security banks may use. One is known as the direct-modem way, which processes transactions without those being transmitted over the Internet. The other is known as encryption. During encryption, an algorithm is used to distort data so that the information only arrives in its right form to the designated recipient. Either of these systems tends to be reliable.
Most of the security breaches resulting in stolen funds or unauthorized release of information occur in ways which do not involve the bank’s systems. Instead, through scams called “phishing,” customers receive e-mails with logos and other graphics that simulate those of the bank. The message frequently has a tone of urgency. The text might be worded to warn the recipient that such-and-such information is needed to allow the accounts to continue to be maintained or, ironically, to prevent a breach of security. There might be a request for specific information such as a PIN or simply a link to click. The phone number provided will connect with the con, not the authentic bank, of course.
Given the prevalence of those kinds of scams, online customers should be wary of all e-mail communications. Unless they are certain what is being transmitted is actually from the bank, they should call their bank to inquire about the e-mail. They should not call the phone number provided on the e-mail.
Security can also be breached when the customer’s computer doesn’t have adequate anti-virus protection. That can leave the system vulnerable to hackers. The bad guys could download a virus that wreaks havoc with both funds and information. Another safety measure is to take the time to download all the updates onto the computer, both from the anti-virus protection company and other software providers such as Microsoft. There are some virulent viruses that only operate on outdated software.
Other precautions include reviewing online accounts regularly to detect any unauthorized activity. Persistent monitoring might not just turn up fraud but also mistakes such the direct deposit from the employer that hadn’t been made or an overcharge by a service provider. Another tip is to change PINs or passwords often.
Online banking could not have grown so rapidly had the financial institutions’ cyber security experts not anticipated the worst-case scenarios for fraud and privacy violations. Most of the threats come from scams targeted directly at users. Therefore, it’s in their self-interest to know and follow guidance for protecting themselves in general from being conned on the Internet or being victims of identity theft.
That caution can allow them to enjoy the convenience and lower transaction costs of online banking with peace of mind. In addition, although those paper monthly statements and copies of cancelled checks will always remain options, most consumers will be relieved not to be burdened with them on a regular basis.