What is mobile banking?
One by one banks have introduced mobile banking apps for use on mobile phones and tablets. This form of innovation simplifies banking transactions and has brought the most commonly used banking services closer to consumers. After once-only registration, bank customers can simply use their access codes to view their bank balances and transfer money to trusted bank accounts. This has made mobile banking a big hit in the short time since its introduction. DNB research has shown that currently one in four consumers uses mobile banking services and mobile apps are used at least once a week.
Security first in mobile banking
As in online banking by personal computer, banks must weigh user-friendliness against the security of the service provided. In addition to login details, online banking via the PC needs extra verification by means of a one-time security code generated by a card reader, which serves as an additional guarantee to limit third-party abuse.
For mobile banking, extra authentication by means of a card reader is not very user-friendly, as the added value of mobile banking is that it offers easy access, at all times and everywhere. The banks offer mobile banking as a supplementary service, and it is primarily intended to offer customers the opportunity to check their bank balances and transfer small amounts of money. This means that the functionality of mobile apps is limited relative to that offered by online banking with a PC.
Limited functionality enhances security
An extra limitation imposed on mobile banking from the point of view of security is that it has lower transfer limits. Most banks have imposed daily or weekly upper limits of EUR 750 and EUR 1000 on their mobile apps, while online banking allows much higher limits. The research has shown that these lower limits are more than sufficient for mobile apps, as they have proved to be primarily used for transferring amounts of up to EUR 100. Some banks have built in the option for their customers to change the upper limits for transfers in the app themselves, up to the maximum limit allowed by the bank. This can be done by means of a separately generated security code. Some 30% of users with banks supporting this option have changed their limits. Users with their limits set at zero can only view their balances and need additional security codes to transfer money.
Another risk-mitigating measure is the limitation of the number of bank accounts to which money can be transferred. The standard mobile banking option at most banks is that transfers can only be made to accounts that the client used in the past few months. Transfers to these accounts do not need extra security codes, contrary to mobile app transfers to account numbers that have never been used, or have not been used for a longer time. If the user falls victim to fraud, the fraudsters will only have the customer's frequently used account numbers at their disposal, and there is no risk of money being transferred to accounts of unknown third parties. In addition, banks monitor all mobile banking transactions closely to intercept fraudulent transactions, as they do for online banking on the PC.
Apps demand vigilance from consumers and banks alike
Thanks to these measures, over 65% of respondents find banking via mobile apps safe to very safe. However, because of its rising popularity, criminals will also turn their attention to this form of banking. In addition to security measures taken by the banks, consumers also have their own responsibility to use their mobile banking apps with care. Users must take care that no one is watching when using their mobile banking apps on the go, just like they should when entering the PIN for their debit cards, which usually also happens in public places. Lost or stolen mobile phones or tablets must also be reported to the bank as soon as possible. Banks are responsible for the security of the app and should also remain vigilant.
This has become even more important as banks, also because of users' positive response, have announced that they intend to further expand mobile banking functionalities. It is essential to keep monitoring the balance between user-friendliness and security closely.