Summary
Customers are facing serious risks in the online payment world.. Banks have a huge challenge to manage this in the future, not only internally with getting experts on board. Also the customer itself is an important target to educate.
Analysis
More and more customers are facing serious risks using online payment tools and online payment transaction based banking environments. Typically the type of risks customers faced in the past were based on physical contact. Nowadays, the world is completely changed. With more then 90% of payment transactions done through online payment environments, the risks are more serious then ever. Moreover, customers are not aware of simple threats, and, likewise, simple measures to take.
Large banks, like ING, HSBC and many others spent quite some money to be ahead of the rat race with hackers and criminal organizations. Can they win this race? In general terms they can, and they do. But, that is only in general. Most banks are not very open in their communication about serious attacks (which is logical and understandable), but they face a huge challenge in the future. They do experience from several parts of the world, Ukraine, Russia, China, Africa, to name a few, large criminal organizations that can use cheap labor facilities to invent newer technics every day.
This situation also places financial institutions in front of a enormous dilemma: Cooperate with 'hackers' to get the knowledge and experience on board, but at the same time protest the company security secrets at any price. Even specialized companies in these areas offer their services, but in the end it is always hard to judge if they are really 100% reliable.
Nevertheless, with all the money spend, anti money laundering systems and specialized departments in place, creditcards companies like Visa, Mastercard and American Express are usually very quick in detecting unregularities. In the online payment world of today and tomorrow, banks will also have to invest more heavily to avoid higher and higher risks.
The last piece of the security puzzle is also the most weak one: the customer. A website is easily visited (do your kids always use your computer for fun?) and a personal file is quickly created (what about the sites that are not so clear on their privacy policy?). The education of the end customer is maybe the most important target to achieve in the coming years....
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
