Is Mobile Banking Safe? Follow the Best Security Practices
January 7, 2021
Users all around the world are thrilled with the options provided by mobile banking. However, convenience comes with a new set of problems we have to be aware of. Safe mobile banking relies heavily on users’ common sense. First, they need to ask “is mobile banking safe?” Read more to find out.
Once upon a time, digital banking was met with distrust. Those times are long gone now. There’s a saying making rounds on the Internet that millennials never have cash on them. It isn’t a baseless observation: 63% of U.S. millennial consumers rarely use cash. What is more, over 80% of them believe that cash will become obsolete. Online payments are definitely partly responsible for that situation. That demographic welcomed mobile banking with open arms. How many of them asked “are banking apps safe” before downloading them on their smartphones?
While there are initiatives like PSD2 that strive to regulate the digital banking industry and ensure security for all users, the responsibility still lies in our hands. We should be the ones asking all the time “is mobile banking safe?” Keep on reading to find out what you should know about the basics of safe mobile banking.
What Are the Risks of Mobile Banking?
The biggest threat to safe mobile banking is the risk of compromising user’s data. When we think about what kind of data is connected to mobile banking, it’s easy to understand why. Mobile banking could potentially expose the user’s bank passwords, credit card information, and identity details. The consequence of an attack on the user’s money flow could be disastrous.
Is mobile banking any different from other activities in the digital space? Unfortunately, it is not: as of today, we can’t say that any kind of online activity is 100% secure. However, the damage doesn’t involve only the customers: banks are at risk of losing their trust, and if the wronged customer seeks compensation, a lot of money. Third-parties who stole data can take over accounts and manipulate transactions. That is why mobile banking safety is in the best interest of both parties.
Like any other type of mobile app, banking applications can come with a risk of exposing users to cyberattacks.
What are the security risks of mobile banking? 5 Types Of Threats to Safe Mobile Banking
Before we look closer at what makes mobile banking safe, we should define what kind of attacks the users are exposed to while using banking apps. Most avid Internet users will be familiar with the types of cyberattacks described below:
- Malware
Malicious software (or malware for short) spies on the user’s keyboard combinations. Passwords, numbers, account names, are copied and sent to the hacker. Malware can also slow down the device or create spam emails that are sent without the user’s intention.
- Phishing
Phishing is a form of stealing data from users by posing as a trusted online source. Hackers contact users via their emails or phones, asking for banking information. Often the hackers will use a scare tactic to get an emotional response from users and prevent them from thinking before taking actions.
- Trojan
In this strategy of cyberattack, malware is installed as a side-app of another mobile application and quietly spy on the unsuspecting users.
- Fake Banking Apps
Developing a fake banking app and launching at the app store is a profitable business for hackers. Unfortunately, it is fairly easy to pose as a legit development company and release apps on the App Store and Google Store.
- Man-in-the-middle attack
In this instance, cybercriminal interferes with the communication between the user and the bank. The parties aren’t aware of this, leaving the user’s data vulnerable to attacks.
All these strategies have decade-long traditions. Now that we know some of the most common ways hackers will try to steal your information, let’s take a look at some best security practices for mobile banking you can use to keep yourself safe.
How Banks and FinTech Startups Work Towards Safe Mobile Banking
Mobile banking and fintech solutions go hand in hand. However, they were not created equal. Where mobile banking is a natural progression of traditional banking business, fintech boasts its independence and innovative approach towards the consumers’ needs. Fintech is “lighter” in the sense that it’s usually a startup: scalable, agile, focused on delivering one narrow-minded service to a precisely defined target audience. They bring new features to the market and reshape it, forcing financial institutions to adapt. Their inner architecture is perfectly suited to the current technology.
Banks are disadvantaged by comparison. They’re often huge institutions with years of legacy. Their data volume is staggering. Every new feature has to go through a long development process to accommodate the bank’s digital infrastructure. Launching a mobile app is not an easy task in that kind of environment.
However, banks have something that fintech solutions have to work for: customers. Their loyal customer base is ready to accept whatever version of a mobile banking app their bank comes up with – as long as the user experience is better than a visit to the bank’s agency. Banks can offer more complex offers and have bigger budgets for development. They are in a race with fintech, that is true, but that doesn’t mean they’re losing.
Both fintech and banks in the European Union are obligated to follow the guidelines established by the PSD2 directive. As of 2019, it is obligatory to implement those guidelines into their daily digital operations. That affects the way banks and fintech cooperate with each other. It is the biggest step in recent history to create a safe environment for mobile banking users.
How do you keep mobile banking safe?
Safe mobile banking. Instead of asking “are banking apps safe” try to make them as safe as possible before launching them on your mobile device.
Here are the best practices to ensure a safe mobile banking experience:
- Download from trusted sources
The best source for downloading mobile banking apps is the bank’s website. If you still want to download the app from a store, proceed with caution. Read the terms and services and notice if the app asks for access to your camera, pictures, or files.
- Create a strong password
Strong passwords are still considered the best protection from data breaches. How to create one? First, don’t be obvious (making the word “password” your password has been out of style since 2001). Second, combine letters, numbers, uppercase and lowercase letters. Make it long and don’t forget to change it once in a while.
- Multi-factor authentication
The majority of banks require at least two-factor authentication to confirm any kind of operations on the app. Don’t opt-out of this advantage.
- Beware of unknown wireless networks
You can never be sure who’s providing the open wi-fi in malls or cafes. If a banking transaction can’t wait, use your cellphone connection instead of free wifi.
- Install anti-malware software
This goes without saying. Reliable anti-malware software is a must for everyone interested in safe mobile banking.
- Set up alerts
Alerts will inform you of any activity performed on your banking account. Set them up for your email, text, and other preferred forms of communication that will make you act right away.
- Keep your mobile banking app updated
Outdated software is as good as nothing. Don’t skip those update notifications when they pop on the screen!
- Pay attention
Perhaps the only advice that matters in the digital world. Cybercriminals thrive on a lack of focus and emotional responses. Put some effort into your mobile apps and your safety will improve greatly.
Taking all of the steps mentioned above is the best way to have safe mobile banking operations.
In Place of Summary: Is Mobile Banking Safe?
The question “is mobile banking safe” does have an answer, but it’s a tricky one: yes, it is safe – as long as the users remember about the basic safety precautions. Consumers need to take care of themselves. Banks can do everything to make their apps secure, but they won’t protect anyone’s mobile device. Perhaps the emphasis shouldn’t be put on pushing the app developers to produce more and more technologically advanced mobile apps but on the education of digital natives.
Read more about mobile banking and Fintech trends in our related articles:
January 7, 2021
