Dangers of Digital Banking

Scott Repasky
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Anxious to Access Money

The latest technology makes it so easy to check your finances and catch up on daily spending. However, it can also make it easier to spend money quicker than you would when paying bills via snail mail. Today, you can pay with your phone at places like Jamba Juice, order products with Paypal, transfer money from account to account with the touch of a button, and more.

Therefore, many consumers use their phones to make two-minute checks on their bank accounts before a purchase and then spend impulsively. Also, the ease with which you can make a purchase can make it more difficult to resist the urge to buy something. Have you ever received an email alert containing a coupon for a product you’ve been eyeing, but didn’t need it until the coupon arrived? Now you do, and it’s easier than ever to complete the purchase.

However, it’s important to take a step back and ask yourself if you really need the item. The answer should be yes, then you should also make a real effort to spend this money.

Checking your bank balance too frequently or watching your money dwindle can be damaging to your mental health. Some people begin to feel anxious when checking their bank accounts, and they may become obsessive about watching their dollars.

Risky Online Behavior

Many of us aren’t accustomed to the difference between real life and the world of the Internet. We treat something posted online as factual. We act as if the same rules apply even though there’s an absence of face-to-face interaction. This can be a dangerous assumption to make.

People are a lot more guarded in real life with the people they interact with. But when a person is behind the pseudo-anonymity of a social networking site, then they don’t have that same inhibition.

This is especially true when financial or other sensitive information is posted online. It can lead to dangerously loose routine with your security, money, or reputation.

Finances Are Involved

The security of your financial data is built on trust, especially if you bank online. When you monitor, transfer, and manage your monies online, then you've got to have trust. You can't afford for someone to take your hard earned money, or spend your money without your knowledge. You would be furious if someone did this in person, and so the online world is no different.

You need passwords and bank account information to be secure and safe. You shouldn't share this information with just anybody. Even your closest confidants should not be given or allowed to have unrestricted access to your finances.

Exposed Credentials

It is an all too common occurrence to hear of data breaches and stolen identities. These incidents are becoming so prevalent because of numerous attacks targeting online services such as email and banking.

If you use the same logon information for online banking as you do for email, then these attacks can sometimes be made easy for the hacker. It’s been popular to set up webmail accounts on the same domain as your main online banking domain, as it helps keep your logon credentials organized.

Another reason is that many people still use basic passwords that aren’t very difficult to crack and are often the same for multiple sites. A weak password for an email account could make it much easier for someone to steal your online banking credentials as well. Just because you haven’t heard of these attacks doesn’t mean they haven’t been attempted. The reality is that many of the attacks are kept silent, as the banks try to preserve their reputation and keep customers from being fearful of their services.

Evaluating the Risk

As with most anything in life, there are risks involved with using a bank’s online services – but if you take care to safeguard your information, it’s relatively easy to minimize the risk. Two primary reasons for using online services are to pay bills and transfer funds electronically. Although many banks offer additional services such as online-only banking that allow you to manage your account transactions from your computer and mobile devices, there are risks involved with both approaches.

Account Access: The primary danger with banking online is the loss of your login information. Although your financial institutions may offer a tools to help you access forgotten passwords, it’s wise to have alternate ways access to your account in case this tool doesn’t work. Your physical address and phone number are usually required to change your password in order to protect against fraud – keep that information in a safe place!

File Security: Banking online can put the security of your data at risk if you are not careful. Always close your browser windows when you are not actively using your bank’s site to access your accounts. Additionally, ensure that your computer is protected with anti-virus and anti-spyware software.

Peer-to-Peer Services

Today, it is easy to set up your own personal financial platform and do financial management yourself. It only takes a couple of minutes to set up a new electronic banking account or e-banking account. Then, you can access your banking and payment information, transfer funds, and pay bills electronically from your desktop or mobile device. This is a great service to have, but what are some of the risks of digital banking?

Electronic banking and other forms of digital banking are convenient and efficient. However, this convenience can come with security concerns. Because you don’t need to visit the bank, there is a lower risk of face-to-face financial fraud. However, electronic banking services are still connected to the internet, and so they are still vulnerable to cyber criminals. Also, digital banking is easy for a variety of people to access, and that means there is the potential for it to get into the wrong hands. If you are a digital banking user, you should educate yourself on its risks.

Establishing Better Security

The next time you’re standing in line at the bank trying to remember your debit card PIN, don’t be surprised if a wave of anxiety washes over you. That’s because you’re likely to remember a story in the news about a tokenization embezzlement scheme, or a cyber burglary of millions of credit card identities by a criminal ring.

Technology is a double-edged sword. Digitalization has made your life easier with mobile banking, online bill pay, and the ability to conduct transactions from just about anywhere, anytime. But, it’s also an attractive target for hackers with the tools available today.

Risks of your data being breached have never been greater, but you can mitigate them by making sure you have secure login methods in place. It's important to weigh the benefit of having your financials at the tip of your fingers versus making sure your information is being protected. Here are some best practices for safeguarding your digital identity.

Methodology and Limitations

Data that was used in the expert interviews was collected in October 2012 together with subsequent in-depth interviews in January 2013. Data collection was based on qualitative interviews conducted with 40 individuals from small enterprises that are not directly subject to the Payment Services Directive (2007/64/EC). For identification purposes, the sample was divided into two groups, i.e. “MixedSmall Business-group” and “Specialist-group”.

Interviews were conducted face-to-face, and participants were provided with a written information sheet prior to the interview. In the interviews, a semi-structured interview guide was used. The aim was to explore expectations from the introduction of direct debit mandates and credit transfers, and how they perceive the features they were provided with by the banks, such as support services. A comparison on the payment services market was made between the groups.

The data analysis was carried out as a qualitative content analysis, where the meaning of the expressed elements was analysed. For the purpose of the classification, the software NVivo was used.

Fair Use Statement

In this video, I discuss the dangers of digital banking. As more transactions are done online, the security of financial institutions and customers have been increasing and more secure devices that are less vulnerable to cyber attacks are being developed. But the financial system is arguably even more vulnerable to cyber attacks having just been hacked, and a lot of people are worried about cyber criminals stealing money from their bank accounts. The threats, however, are under control, and you can stay protected from identity theft by practicing adequately advanced safety measures when using financial related digital devices.

Digital banking works exactly the same as traditional banking; you can withdraw and deposit money, deposit checks, transfer money between accounts, check your balance, etc. The only significant difference from traditional banking is that all of your transactions are done digitally. This makes it easier for criminals to hack into your online bank account and steal your money. Unfortunately, there have been cyber attacks by criminals stealing money of hundreds of millions of dollars from banks, and people are concerned that they could be next to have all of their money stolen.