Risk management takes on a whole new meaning when it comes to mobile banking. Banking customers, traditionally used to balancing chequebooks and awaiting mailed bank statements, now have an entirely new set of best practices for financial risk management to learn. Mobile banking has become extremely popular and offers significant advantages for low-income populations and people in rural communities. In fact, the number of mobile banking users is predicted to rise to 57 million in the U.S. alone this year.
However, the expansion of the mobile banking market brings with it new financial risk factors. Educating your customers about this new environment is important for reducing financial risks, both for your customers and yourself. Here are some of the top concerns in the branchless banking marketplace.
More Users Mean More Threats
The mobile banking market is growing at breakneck speeds. While this is great for business, it also poses some security threats, like data theft, malware, and third-party apps. As more people switch to mobile banking, mobile threats will continue to become more prevalent and more complex. Banks will need to keep up with mobile security measures and educate their customers about using mobile banking apps securely:
Encourage customers to only use their mobile banking apps over secure, private wifi.
Hold a seminar on security threats and preventative measures, like this Oklahoma bank did.
- Post a page of security tips on your website or within the app itself.
Tightened Security For Mobile Payments
Mobile payments are likely to take longer to catch on than mobile banking. The majority of consumers currently use mobile banking apps to check their balances and transfer money between accounts. However, many consumers have trepidations about using apps to send payments, which is understandable.
One of the biggest fears is data theft and misuse, and it’s certainly not an unfounded fear: the recent data breaches at Target and Wendy’s show how easy it is for hackers to extract data from payment devices. On the other hand, tighter security features also have the potential to cause performance issues and can weigh down the scalability of the app. The answer will need to be a balance between security, performance, and adaptability. Nevertheless, mobile payments will become more popular over the next several years, and banks will need to stay ahead of the trend.
Outdated Security Assessment Tools
It’s inevitable that authentication and identification procedures will become more strict as branchless banking grows. Currently, financial institutions are pushing for a redesign of the Cybersecurity Assessment Tool by the Federal Financial Institutions Examination Council. The tool is meant to identify cybersecurity risks and prevention methods. The FFIEC will review the tool sometime this year and hopefully release a newer, updated version. The tool will be essential as mobile banking continues to grow.