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Just how secure is online banking?

(Editor's note: An updated version of this article is being prepared as some information in the current one has been deemed no longer correct)

The modern consumer craves convenience, we have technology at our fingertips and we are able to use it to complete many daily tasks.

While we are comfortable shopping online and even making transactions between bank accounts, many of us know relatively little about how safe our money and bank details are.

It is important to feel secure when inputting personal data online, and able to trust that your bank has necessary preventative and protective measures in place in the event of attempted online fraud. But what should you know about and what can you do to stay safe in the virtual domain?

What is online fraud?

Online fraud is the act of using the Internet to commit a crime and can include: business opportunity fraud, charity donation fraud, domain name scams, identity fraud and mass marketing fraud. Scammers most frequently use malware, phishing and vishing to carry out such attacks.

  • Malware refers to software programmes specifically designed to inflict unwanted actions on a device such as: Trojan horses, viruses, spyware and worms. Each has the potential to cause a great deal of damage from deleting information to accessing personal information.
  • Phishing is the action of defrauding holders of online accounts by posing as a legitimate company in order to acquire personal information. For instance, you might receive an email from a bank (either your own or one that is not), requesting that you fill in a form to prevent your account being deactivated.
  • Vishing, similarly to a phishing scam, the fraudster will masquerade as a well-known and trusted business in an attempt to gain information. However, rather than this being carried out via email, the scammer will telephone their victim.

How comfortable are we with online security?

By May 2014, the adoption of mobile banking apps had increased to 15,000 downloads a day in the UK alone, resulting in an estimated £1 billion worth of mobile and online banking transactions a day according to a report by the British Banking Association.

Similarly, the Office of National Statistics reported that in 2014 71 per cent of adults aged between 25 and 34 used Internet banking services, and while this is a decrease of 5 per cent compared to findings in 2013, there was an overall increase of 3 per cent of adults using Internet banking as a whole.

What can we do to stay safe when banking online?

Dependent on your device, there may be inbuilt malware protection software that will detect irregularities such as viruses and Trojans.

  • Apple’s iOS has built-in security to identify malicious threats
  • The software is not automatically included on Android hardware and users must acquire it separately

Malware protection is more effective than passwords, which only provide a certain level of security. They offer another layer of defence against online fraud rather than being the be all and end all.

However, it is good practice to regularly refresh passwords and PIN codes, ensuring that you are using a unique combination of letters, numbers and punctuation for your various log in details.

What security measures should your bank have in place?

Banking institutions and retailers in particular strive to find the right balance between scrutiny and security. Methods of fraud protection that are too relaxed can cause sensitive information to be at risk. Meanwhile, too many levels of authentication can lead to frustration and the abandonment of the services.

Many banks’ security measures are not visible to customers and aim to detect fraudsters targeting or accessing accounts, so that you are provided with as smooth an experience as possible.

A number of banks also offer extra protection services, such as free software and useful security advice to secure your online account.

Banking and online security

Making sure your bank details remain secure online relies upon the vigilance of financial institutions, retailers and individuals.

While there are measures automatically put in place to prevent cyber-attacks and consequently fraud, it is the responsibility of individuals as well as service providers to maintain a significant level of data protection.

The Co-operative Bank provides customers with a range of high street and Internet banking services, using our unique ethical policy to ensure that they are always at the heart of what we do.

Image Credit: Shutterstock/Petr Kopka