Banks offering online banking services to retail customers need to beef up their security features, especially in light of the Federal Financial Institutions Examination Council's (FFIEC's) 2006 mandate, warned a recently published report.
In a survey of 1,100 online banking users conducted by analyst firm Corporate Insight, nearly 80 percent of all respondents said they were "concerned" about the issue of online security. Of the 14 institutions that Corporate Insight investigated, only three provide their clients with additional verification or security methods beyond the traditional login and password requirements.
In addition, the research undertaken in the third quarter of 2005, uncovered a wide discrepancy in the amount and type of alerts that banks offer to notify customers of suspicious account activity.
"Despite the fact that phishing and other hacker-related activities have inched their way into the online banking environment, banks have been hesitant to introduce security measures that place too many restrictions on their account holders," said Stephanie O'Connor, senior analyst, Bank Monitor at Corporate Insight. "Many have relied on existing alert capabilities and password requirements to protect their clients but ultimately, the future of online security will be a mastered balancing act - online banking firms must find a way to protect their clients against fraud without inconveniencing them."
In addition to the poll of web banking customers, the study, Online Security: Log in at Your Own Risk, bases its conclusions on an in-depth analysis of the online security capabilities at 14 financial institutions and includes detailed findings of each firm's respective offerings.