Where there’s money, there’s also an opportunity for fraudulent actors to leverage security flaws and weak entry-points to access sensitive, personal consumer information.
This has caused a sizeable percentage of consumers to avoid adopting mobile banking completely and has become an issue for financial institutions who must figure out how to provide a full range of financial services through the mobile channel in a safe and secure way. However, with indisputable demand for a mobile-first experience, the pressure to adapt has become unavoidable.
In order to offer that seamless, omnichannel experience consumers crave, financial institutions have to understand the malicious actors and fraudulent tactics they are up against. Here are a few that have to be on the mobile banking channel’s radar.
1. Increased device usage sparks surge in mobile malware
Banking malware has become a very common mobile threat, even more so now as fraudsters leverage fear and uncertainty surrounding the global pandemic. According to a recent report by Malwarebytes, mobile banking malware has surged over recent months, focused on stealing personal information and using weakened remote connections and mobile devices in a work-from-home environment to gain access to more valuable corporate networks.
The financial burden of a data breach resulting from mobile malware could potentially set organizations back millions of dollars, as well as do some serious damage to customer trust and loyalty.
2. Sacrificing software quality and security by effecting premature product rollouts
Securing mobile is a laborious task that requires mobile app developers to factor in several entities, including device manufacturers, mobile operating system developers, app developers, mobile carriers, and service providers. No platform nor device can be secured in the same way, meaning developers are constantly having to overcome a unique set of challenges in order to reduce the risk of fraudulent activity.
The reality of such a complex ecosystem is that mobile app developers are not always qualified to understand all the risks at play, which leads to unsecured mobile data, connections, and transactions. Additionally, the speed at which the market moves thanks to emerging technologies and innovations creates an added layer of pressure for developers. Lacking the resources and time to properly protect consumers can lead to high-profile attacks where sensitive data is exploited.
3. Vulnerabilities in digital security protocols
At any given time, every entity in the ecosystem described above must have high confidence in the entity on the other side of the transaction to ensure its legitimacy. A lack of digital security protocols like secure sockets layer (SSL) and transport layer security (TLS) in mobile banking apps makes it difficult to establish encrypted links between every entity that ultimately help prevent phishing and man-in-the-middle attacks.
If we continue growing our ecosystem at the current rate, adding to its complexity and connecting more and more third-party services and networks, we can no longer avoid fixing the broken system we have for SSL certificate validation.
4. Unreliable mobile device identification
Another issue at play is device identification. The only way other entities in the ecosystem can recognize a unique device is through device fingerprinting. This is a process through which certain unique attributes of a device – operating system, type and version of web browser, the device’s IP address, etc. – are combined for identification. This information can then be pulled from a database for future fraud prevention purposes and a range of other use-cases.
Data privacy concerns and limited data sharing on devices, however, have weakened the process and reliability of identification. If we do not have enough discrete data points to establish a reliable digital fingerprint, the whole system becomes ineffective.
5. Time to update authentication techniques
Fraudsters are always on the lookout for ways to intercept confidential login information that grants them access to protected accounts. Two-factor authentication (2FA) has become banks’ preferred security method for reliably authenticating users trying to access the mobile channel and staying ahead of cybercriminals.
More often than not, 2FA relies on one-time-passwords (OTPs) delivered by SMS to the account holder upon attempted login. Unfortunately, with phishing – especially via SMS – on the rise, hackers can gain access to a mobile device and OTPs delivered via SMS, and gain access to accounts and authenticate fraudulent transactions.
There are also a number of other tactics – e.g., SIM-swapping – attackers use to gain access to sensitive information and accounts.
6. Lack of industry regulation and standards
Without the establishment of rigorous standards and guidance on online banking security and protecting the end-user, low consumer trust will inhibit mass market acceptance. The Federal Financial Institutions Examination Council (FFIEC) has yet to issue ample guidance on the topic of authentication and identification on mobile devices. Mobile security standards need to be a top priority for regulators, especially as new technologies and mobile malware continue to disrupt the market.
The underlying theme for banks to keep in mind is that trust is a currency they cannot afford to lose in such a competitive financial services market. In the race to provide seamless, omnichannel banking experiences, integrating better security protocols without compromising usability can feel like a constant balancing act. Researching the latest tools and technology as well as building trusted partner relationships with third-party service providers is the only way banks can differentiate themselves in a dynamic security landscape.