The Dangers Of The Online Banking Revolution

The Internet hasn’t just allowed 24/7 shopping, booking your own holiday and finding more information than anyone could ever take in. It has also changed the way we do business and budget, the way we can take care of our own finances without having to rely on moody employees and haughty managers.

Online banking increases convenience, allowing people to access their accounts and undertake financial transactions anytime anywhere. But such convenience invariably comes with major risks. To be on the safe side, you need to be aware of the many dangers of this new technology.

Unsecured Connection

A big danger in online banking is Internet traffic. For all the convenience the Internet offers, it is still very much an unsafe medium in many respects. Any enterprising hacker can intercept traffic that passes from the online banking usersâ?? computer to the banking server using techniques such as snooping and man in the middle attacks. This risk is highest when using public Internet connections, such as a Wi-Fi account in a coffee shop. Banks overcome this inherent drawback by encrypting the traffic. As an online banking user, you, too, should take utmost care to conduct financial transactions using a secure HTTPS URL rather than through a normal HTTP URL. Do these terms sound like a foreign language to you? Then make sure to get help, as a basic understanding of Internet architecture and technology are essential for your own safety.

Targeted Attacks

The second major danger to online banking is the threat of cyber criminals stealing login credentials such as user name, passwords and account numbers to undertake unauthorised financial transactions. Cyber criminals slip in malware and keyloggers that record the activities that take place in the computer and steal data including email. The malware then sends across the data to their masters on the sly. If such data includes online banking access details, the cyber criminals can make an entry and commit transactions, bypassing the security mechanisms in place. They also launch phishing attacks that eke out information from the account holder and use such information to access the account or to authenticate transactions.

Computer viruses are common, the deployment of security mechanisms such as anti malware software and firewalls notwithstanding. Noted security researchers Trend Micro reports that 253.4 million systems may well be infected with malware worldwide â?? a staggering amount by any standards. Of special note is the deadly Zeus virus that has been doing the round recently. This virus specialises in stealing financial information from unsuspecting users and thus represents a major threat to your bank account.

Many cyber criminals send in phishing email, which may take many forms. Some emails masquerade that of the bank and ask for personal information. Others give false promises, such as a lottery won and ask for personal details to send in the prize. Needless to say, all such email contain a link and when the unsuspecting user clicks on the link, it leads to the computer being infected with malware that steals data. With mobile banking using smart phones, there is also the added risk of someone stealing the phone to access the data it contains.

Collateral Damage

Even if the individual account holder takes all precaution, they can end up as victims of collateral damage. Cyber frauds or hackavists may hack the server of a banking site or any enterprise with which the account holder has undertaken financial transaction and take away details such as account numbers and passwords. Many hackavists post such information in the public domain. Many professional hackers steal such data to hardened criminals. A few others use the details to commit fraud themselves.

Safeguards

To enjoy the benefits of online banking without suffered from a major disaster, it is important to always remain on the alert. As far as possible, access the account only from a secure connection at the home or office and from a computer with good anti malware protection. Change passwords frequently, set up instant-alert facility for notification through SMS when financial transaction takes place and do no click on suspicious email links or disclose personal information to strangers.

Also, you can start building a better financial future for yourself by taking out a guaranteed bank account. This type of basic bank account can be highly instrumental in reducing your debt, since it does not allow for overdrafts. Also, it is typically offered by new financial institutions with a better understanding of the requirements of the digital marketplace in general and online banking in particular. This understanding is put to use to increase online safety and improve your overall banking experience.

We have touched upon some of the dangers inherent to online banking, but you should also remember that the safety of new technologies is continually being improved. There was a time that 24/7 shopping or booking your own holiday online were considered extremely unsafe. Just like them, online banking is headed for a great future if it can learn from bad experiences and give customers what they want.

William Masters has carved out niche for himself in the field of finance journalism. From his cozy London office, Masters contributes to a wide range of magazines and blogs, writing about both micro- and macro-economic topics.

Top image courtesy of scottchan / FreeDigitalPhotos.net

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