Retail banks in the developed
English-speaking countries - Australia, Canada, UK and USA - are refraining from implementing more sophisticated multi-layered online banking security because of concerns that this could obstruct customer
convenience and reduce the migration of traditional customers to online
banking services, the mi2g Intelligence Unit has learnt.
Most online bank accounts are accessed simply by typing in the username and password as well as answering a personal information query like
"mother's maiden name".
There is no biometric authentication, digital
equivalent of a signature, the requirement to frisk a smart card or type in some extra numbers available through a bank issued "random" key
generator.
Recently the plight was highlighted of online customers belonging to
13 banks and 5 eCommerce portals which have been targeted with electronic identity theft schemes. Unsuspecting customers have been duped into surrendering their username and passwords via look-alike web sites.
mi2g has also suggested that banks with online access should offer their customers triple layer authentication, ie, something that they know, something that they have and something that they are.
In continental Europe, some retail banks have already begun issuing cards to their online banking customers that create new "random" numbers
to feed in each time they log on to their online account.
Although this is not a perfect system, it gets closer to the triple layered model
advocated by mi2g.
"The current state of online banking security measures is proving to be inadequate to fight increasingly frequent identity theft and sophisticated fraud.
There is a need for multi-layered authentication,"
said DK Matai, Executive Chairman, mi2g. "So far banks are resisting this investment on the basis of cost, customer-convenience and claims that online fraud has caused low damages. In the near future, those banks may have to do an about-turn and offer greater security to bolster flagging customer confidence as online fraud continues to damage trust."
The cost of online banking fraud will at some point in the future exceed the cost of migrating the millions of online bank customers to a more
secure multi-dimensional authentication environment. At that point, retail banks will be forced to migrate to higher levels of online security, at a greater cost to the customer.

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