Online Banking Risks

Online Banking

As technology continuously evolves, the way people do business, interact, and live gradually get integrated with newer technologies that is more efficient and convenient. An example of this would be the way people manage their money and their day to day banking. In the recent decade, the growth of the internet and specifically, internet banking has been a significant highlight of how people or organizations handle their routine tasks which used to require physical interactions. According to Canadian Bankers Association, 47% of Canadians use online banking as their main method of banking which is 39% higher than in year 2000. In addition, in the U.S., 51% of U.S. adults bank online. Examples of typical services provided in online banking include paying bills, applying for loans, transferring money, and purchasing or selling investments. With the benefits of online banking including convenience, efficiency, and cost savings, comes specific risks as well.

Incidents

There are more obvious risks to online banking that are more focused on consumers such as the incident regarding Clare Logie. This would be the risk of incorrect inputs such as inputting a wrong digit in shifting funds to wrong accounts. This resulted in her loss of 2000 pounds due to the current legislation as she could only request the money back from the recipient of the money.

On the other hand, there are risks mentioned in this report involving cyber-attacks and hackers that can elicit passwords of a company to drain funds from their bank accounts as long as they have connection to the internet such as Cynxsure’s loss of $100,000 due to online banking fraud in 2010. There was also another incident involving Joe Lopez where his computer system was hacked into and approximately $90,000 was transferred from his Bank of America account. In the U.S., in a sample of 100 large and small banks surveyed, 40% of them do not have plans to deal with online banking risk and 50% were not aware...