October 27, 2020
3 Reasons Why Online Banking Is Safe
Banks have benefited the most from technology in the last few decades. Thanks to these advancements, you no longer have to stand in queues in banking halls. In fact, you can transact without leaving your couch. To make sure their customers are protected, banks invest in top-of-the-line security features. Keep reading to find out why online banking is safer than ever.
1. Online Security
Banks are well aware of the risks that come with online transactions. While every bank is free to take the extra mile, there are industry standards expected from all online banking systems. They include:
- Firewalls – This term refers to a protective barrier between a bank’s internal network and the internet. Firewalls may consist of both hardware and software that filters out data attempting to enter the system.
- Encryption – Operating online requires that data is transmitted from time to time. Encryption protects sensitive information by making it unreadable unless you have an encryption key. Banks are required by law to use advanced encryption standards.
- Antivirus Protection – While firewalls protect the entire system, individual computers can still be compromised by virus attacks. All banking computers have updated antivirus software that scans the network for malware. If detected, the malware is quarantined or removed.
- Multi Factor Authentication – This is a requirement that you identify yourself before getting access to your account. Multifactor requires more than two factors, such as entering a pin and answering a secret question.
2. Chip Readers
Modern chip cards have replaced the traditional magnetic stripes. According to reports, this migration reduced credit card fraud by $2 billion in 2018. Europay, MasterCard, and Visa (EMV) cards are more secure and efficient. The EMV cards contain a computer chip that doubles as both processor and a transmitter. Every time you use the card, a new code is generated. This code is only viable for that one transaction. Additionally, you will be required to give a pin or a signature before you can use the card.
Businesses have had to invest in newer EMV card readers for smoother transactions. Thanks to these newer chip readers, shopping is now a delight. Upon entering your data, the details are seamlessly exchanged between the card and your bank. Modern chip readers are smaller, faster, and wireless. Near Field Communication (NFC) is the latest tech to hit the market. When used with contactless chip readers, the software makes smartphones act as smartcards.
3. Data Verification
Criminal enterprises sometimes use banks and other financial institutions to legitimize or to fund illegal activities. It is a violation of the anti-money laundering regulations. It is only through data verification that such elements can be discovered before it’s too late. These proactive security measures are referred to as Know Your Customer (KYC) compliance.
Banks perform data verification in three steps. First, users are asked to enter their information online when applying for online banking. The next step is to provide evidence to support the personal data entered. The documents provided by users are checked for authenticity. Additionally, banks continually conduct anti-money laundering screens to prevent the risk of fraud.
Ultimately, technology has made online banking safer. While hackers will also try to find loopholes, banks have proven resilient. The number of credit card fraud incidents has dropped due to better chips, and data breaches are getting fewer. There is no need to worry, provided that you keep your banking information safe.