Online banking and its younger, upstart cousin, mobile banking, have become indispensable tools for today’s time-pressured customers. With fraud attacks on digital banking systems growing however – total fraud committed in Germany in 2013 alone amounted to more than €100 million – it is understandable that consumers are increasingly skeptical about their safety. As a result financial institutions are under substantial pressure to ensure the security of their systems by both regulators and their own customers.

In response to individual national and supranational regulators’ calls for action, for example the recent ECB SecuRe Pay initiatives – not to mention a slew of recent surveys showing considerable consumer scepticism toward digital banking – we thought it might be useful to highlight our key recommendations for institutions currently reviewing the security of their online and mobile banking platforms:

• Your flexible friend
  Flexible, holistic fraud solutions capable of adapting and expanding to meet the requirements of new innovations or channels are essential in today’s brave new world of innovation-rich omnichannel payments. New channels often imply new risks of fraud as existing security infrastructure designed for isolated channels can be more easily compromised.

• Consumer confidence is king
  Remember that your customers expect the confidence of security with their payment products although they probably don’t want to compromise on convenience and user-friendliness. Cumbersome multi-factor authentication processes not only turn customers off, they can even deter customers from using your platform.

• Get the bigger picture
  Organisations that think holistically about striking a balance between security processes and the user-friendliness of their authentication systems when seeking to reduce fraud stand a much better chance of building a digital bank that customers will use and want to start using. Dynamic systems such as that of IRIS Analytics, which invisibly adapt the security method in real-time according to the transaction type can help banks strike that difficult balance.

• Don’t miss the digital banking boat!
  Putting security at the heart of your platform and presenting that to your customers is essential to drive digital banking use.  Apart from being invaluable tools for retail banks to serve customers efficiently at lower cost than branch-based banking, online and mobile banking can also provide substantial loyalty and customer-experience benefits if carefully implemented. Security concerns however are still an obstacle to driving take-up – a survey in Germany revealed 50% of consumers were concerned about the security of their digital bank.

• You are not alone….
  It’s nothing new to remark that fraudsters are canny creatures. Our research note outlines just some of the wide variety of schemes and scenarios cooked up by fraudsters in recent years. As digital bankers however you are not defenseless. There are solutions out there that can intelligently adapt their fraud detection to meet new threats and plug gaps in existing security architecture with an additional layer of fraud prevention technology that works in real-time, undetected by your customer. In the online space we can hear you scream…. 

For more in-depth analysis of online and mobile banking fraud prevention technology, follow the link for our newly published Online Banking Research Note

Nikolaus D. Bayer, Managing Director, IRIS Analytics