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Bank Robbing 2.0

May 15, 2012 By David Sutton Leave a Comment

Financial institutions have plenty to worry about these days: robbers, hackers, fraudsters, scammers, viruses, malware, trojans —and the list goes on. One little talked about threat to FIs and their customers is ATM fraud in the form of skimming.

Skimming is the act of hijacking account information through the use of a card reader, usually installed on an ATM and fabricated to look like a part of the machine. Thieves have even utilized the readers used to unlock after-hours ATM kiosks. Often, a camera accompanies the card reader attached directly on ATMs and records customers entering their PIN.

Fraudsters can then withdraw money directly from the compromised account or sell the information to other criminals. Guns, drugs and other illicit materials can then be purchased with the stolen funds and card information, or criminals can perpetrate identity theft.

A recent post on the Krebs on Security blog, a banking and finance security blog, shows the latest in skimmer technology recovered from a compromised ATM. The unit is an all-in-one card reader with a built-in pinhole camera, seamlessly attached to an ATM — pretty sophisticated stuff.

One expert estimates more than $350,000 stolen from ATMs worldwide every day via skimming. With ATMs seemingly everywhere one could go – grocery stores, movie theaters, malls, gas stations – there is no shortage for opportunity. This reveals another part of the problem: unless you are a bank security expert, chances are remote that anyone from your FI has mentioned skimming or how to minimize the risk.

Here are some simple steps both FIs and their customers can use to lower the chance they will be victimized:

  1. Before inserting your card, always scrutinize the ATM for parts that look out of place, been added on or just plain don’t belong. Check for mismatched and uneven seams or other irregularities.
  2. Use your hand as a shield while you enter your PIN. This is perhaps the easiest preventative measure one can take. It will also prevent shoulder snoopers from spying on you.
  3. Educate yourself about skimming (and other forms of fraud). FIs can do a better job teaching their customers about skimming to help customers and members minimize the risk of being victimized. Hang a poster next to the ATMs or print warnings right on the machines, so it is fresh on the ATM user’s mind.
  4. Remind customers to check their account activity often, and report any unfamiliar transactions to the FI.

As FIs continue to utilize ATMs for both convenience and cost-savings, the frequency of skimming attacks will only increase in both volume and sophistication. Should these attacks be thwarted, FIs, customers and law enforcement must stay vigilant and ahead of the criminals and their ever-advancing technology.

Does your FI already have preventative measures in place against skimmers? Let us know in the comments section below or Tweet @bankingdotcom.

Editor’s Note: David Sutton has a BA in economics and a MS in business journalism, and his articles have appeared on Forbes.com and in the Boston Business Journal. David has had a bank account since he was three.

Filed Under For Financial Institutions Tagged With ATM, financial institutions, fraud, security

FI Spotlight: Philadelphia Federal Credit Union

April 27, 2012 By Banking.com Staff 2 Comments

As Financial Literacy Month comes to a close, financial institutions and organizations have enacted various campaigns to educate members and customers across America. The Banking.com staff has been closely watching some initiatives including NCUA’s Twitter campaign and the American Bankers Association’s 16th Annual Teach Children to Save Day, and in May we will reveal how our readers endeavored to help their community from our very own poll.

To better understand the community they serve, Philadelphia Federal Credit Union (PFCU) in Pennsylvania revealed the results of its first annual Financial Literacy Survey. The survey researched the financial knowledge of Philadelphia-area residents, taking particular interest in their saving practices, spending habits and financial attitudes. PFCU’s research revealed that more than one-third of Philadelphians are in critical need of improving their financial condition, indicating they were not able to save any money in the past 12 months. Additionally 45 percent of Philadelphia credit card owners typically carry a balance month-to-month and 79 percent of survey respondents were less than “very successful” at spending within their budget in the past year.

As a result of the survey findings, PFCU is ramping up its educational programs and looking to better cater to its current and prospective members. Banking.com spoke with Philadelphia Federal Credit Union’s Accredited Financial Educator Karl J. Bernhard about the survey findings and what they mean for the institution and financial industry at large.

Banking.com (BDC): What survey statistic did you find most surprising, and why?
Karl J. Berndhard (KJB): I found it most surprising that more than one-third (37%) of Philadelphians were not able to save any money in the past 12 months. This tells me that Philadelphians are in critical need of learning the skills to better manage their money. In response to this finding, PFCU is expanding its free financial education programming now through May 31 to the public in an effort to instill healthy financial habits.

BDC: For Americans and Philadelphians trying to get their financial condition in shape, what small steps can people take to try and improve their financial health?
KJB: I always say there are five steps you can take to take control of your finances immediately. The simple steps include – create a budget, track spending, open a savings account, check your credit report and then last but not least, take advantage of financial education that is available to you like PFCU’s free seminars on budgeting, saving, and credit.

BDC: What tools and/or services do you offer to your members to help them budget their money?
KJB: We offer a Budgeting & Credit Seminar on a regular basis to our members that helps them understand the importance of saving and tracking where their money goes. We give them the tools they need to create a realistic budget and manage their credit.

BDC: With the surge in online and mobile banking, do you believe that having tools available to members 24/7 is helping improve their financial literacy and financial health?
KJB: It’s certainly making the information more available to them and making it easier than ever for people to track their spending. In addition to offering free 24/7 online banking, we plan to have a mobile app up and running before the end of the year. We also recently launched a Facebook and Twitter page and regularly post and tweet financial tips and advice.

BDC: How have your members reacted to the survey findings?

KJB: I think it is human nature to be curious about how other people are doing financially. This survey for better or worse shows Philadelphians that they aren’t alone. Seventy nine percent of Philadelphians haven’t been very successful at keeping spending within their budget during the past twelve months and 84% of Philadelphians surveyed consider themselves less than very knowledgeable about personal finance.  The good news is there are simple steps everyone can take to improve their financial condition and through our financial education seminars we are making a better financial future accessible.

BDC: What do you predict will be the focus of your financial literacy campaigns and annual survey next year?
KJB: Good question. I think it will be important to continue to take the temperature of Philadelphian’s wellness on an annual basis so that we can be sure our financial education seminars and other services we provide our members are fulfilling their needs and providing the greatest value. Many of the questions we ask Philadelphians will remain the same. Hopefully the results will improve!

You can read more about Philadelphia Federal Credit Union’s survey here or reach out to them on Twitter

How are you helping customers and members to your financial institution? Tweet at @Bankingdotcom or let us know in the comments below.

Think your FI deserves special recognition? Send information to info@banking2020.com.

Filed Under For Financial Institutions Tagged With #FLM12, FI Spotlight, Financial Literacy Month

Infographic: Merchant Funded Reward Programs, An Introduction

April 20, 2012 By Banking.com Staff Leave a Comment

Mindful Insights recently published an infographic highlighting the details and companies behind merchant funded reward (MFR) programs. Take a look at the graphic below to get an overview of how MFR programs work and what it takes to deliver a successful program.

 

 

Filed Under For Financial Institutions Tagged With infographic, Merchant Funded Reward Programs

The Next Banking Generation: The Mobile Teen

April 11, 2012 By Banking.com Staff 1 Comment

April is Financial Literacy Month, and many organizations and financial institutions are providing information and tips to help consumers take the right steps on money management. One demographic driving numerous campaigns for Financial Literacy Month is the pre-teen and teen demographic, the next banking generation.

A recent infographic developed by Safely shines light on how frequently pre-teens and teens are using mobile devices; 75 percent of 12 – 17 year olds own a cell phone. These teens don’t just have phones to call home in case of emergency — they are heavy mobile users who talk about 835 minutes a month on their phones and receive/send an average of 1,200 texts a month. They are also heavy app users, with an average user downloading 11 apps a month.

As financial institutions and organizations help educate consumers for Financial Literacy Month, it is important to keep in mind the new financial generation is a generation that will approach finances with a mobile perspective. See below for the full information from Safely and more stats on the mobile teen:

Browse more Technology infographics.

How are you helping your financial institution’s youth? Tweet at @Bankingdotcom or let us know in the comments below.

Filed Under For Financial Institutions Tagged With #FLM12, financial literacy, Financial Literacy Month, mobile banking, mobile teens

What are your plans for Financial Literacy Month?

April 11, 2012 By Banking.com Staff 1 Comment

As you may already know, April is National Financial Literacy Month and financial institutions everywhere are looking for innovative ways to educate their customers and members. The Banking.com staff took notice of some particularly creative campaigns in the month of April looking to help consumers and financial institutions take advantage of this month’s theme:

We want to know what you’re planning to do this month to help your customers and members? Let us know by answering our poll below.


Have an idea that you’d like to share? Tweet at @Bankingdotcom or let us know in the comments below.

Think your FI deserves special recognition beyond 140 characters? We’re always looking to feature more institutions as one of our FI Spotlights, so send information to info@banking2020.com.

Filed Under For Financial Institutions, Surveys Tagged With #FLM12, Financial Literacy Month

FI Spotlight: University of Kentucky Federal Credit Union

March 30, 2012 By Banking.com Staff 1 Comment

Banks and credit unions have been creating some interesting campaigns to attract customers leaving large corporate banks. To continue the momentum from Bank Transfer Day, University of Kentucky Federal Credit Union launched the “lipstick on a bank” campaign to educate consumers and increase members.

In order to build credibility and raise awareness of the benefits offered by credit unions, University of Kentucky FCU launched the campaign and microsite at the beginning of 2012 to demonstrate that, “You can  put lipstick on a bank, but it’s still a bank.” The campaign and microsite focused on three main benefits to consumers when they join a credit union like University of Kentucky FCU: membership, checking and loans, particularly emphasizing lower fees and better rates.

Megin Morgan, member development specialist at University of Kentucky FCU says of the campaign, “Our goal was to keep it simple and straightforward and to demonstrate why going with a credit union was beneficial.” The credit union has already seen a large increase in new accounts from the campaign which ran during the months of January and February 2012. With 706 new accounts in 2012 reported in early March, and 18 percent increase from 2011, Morgan notes, “We saw this as a successful credit union awareness campaign that seemed to get people’s attention. We could possibly re-run it again in the near future to keep the credit union movement momentum going.”

You can read more about University of Kentucky FCU’s campaign from Credit Unions Online here.

How are you bringing new customers and members to your financial institution? Tweet at @Bankingdotcom or let us know in the comments below.

Think your FI deserves special recognition? Send information to info@banking2020.com.

 

Filed Under For Financial Institutions Tagged With credit unions, FI Spotlight, University of Kentucky FCU

Behavioral Change: Is There An App for That?

March 29, 2012 By Banking.com Staff 1 Comment

To some of us, it might seem that people who don’t know about mobile banking must be living in a cave somewhere. But here’s the reality: Only 10 percent of mobile banking users were prompted to use their bank’s mobile channel by their actual bank.

This is not some revelation from years ago, when mobile features and capabilities were still mostly a novelty, and understandably accompanied by some trepidation. It’s actually a key finding from a survey of 1,527 mobile banking users, encompassing more than 240 banks and credit unions. It was commissioned by ath Power Consulting, a provider of customer experience solutions for the financial services industry.

That’s not the only bad news in the report. It turns out that only one in five users were offered any option to customize their user interface, and fully 40 percent failed to find links for technical support.

It’s relatively easy for those of us essentially embedded in these disciplines and practices to look down on these findings—after all, companies have spent millions developing these technologies, and millions more promoting them. Besides, many of those consumers are surely using their mobile devices for many other functions that would have seemed futuristic just a couple of years ago. So what’s the problem?

Just this past week, acerbic comedian Bill Maher got big laughs on his HBO show by expressing bewilderment at the construction of new retail banks. He noted that he hasn’t walked into a bank for many years, since there’s so much available at the click of a button.

But we should get real too. When it comes to banking, just saying “There’s an app for that” isn’t enough.

It’s impossible to bottle the science behind behavioral change. If we could, everybody would launch something like Facebook out of a dorm room, or create viral videos on a regular basis. What we do know is that some behavioral shifts (such as social networking) occur at an incredible pace, while others (such as specific aspects of e-commerce) are adopted in fits and starts. For the most part, we don’t know why, except that the availability of a new technological capability alone doesn’t guarantee a change in habit.

Money complicates the issue even more. The relationship we have with our banks is fundamentally different than with our favorite retailer or clothing brand; it requires a level of trust, comfort and familiarity that extends far beyond other B2C interactions. It takes a leap of faith to go from using the cell phone to Tweet something personal (which we know others can see) to conducting a sensitive financial transaction.

For the record, the ath Power study does show some promise. While security will always be a prime concern, the mobile channel can play a major role in fraud prevention as mobile adoption improves and consumers become more familiar with alerts. On another front, mobile customers are more loyal: about one in eight say they’ll change banks within two years, compared with one in five in the general customer base. Finally, despite the relative lack of awareness of this category, the quality of a mobile offering is a major factor in choice of bank among the mass affluent and small business owner segments.

That’s all for the good, but this is a behavioral change that needs broader consumer adoption. And for that to happen, maybe the word needs to get out a lot more than it has so far.

Filed Under For Financial Institutions, Surveys Tagged With mobile banking, survey

Mobile Maturity

March 22, 2012 By Banking.com Staff Leave a Comment

Here’s a conundrum: Is the rising concern over security as it relates mobile banking a sign that mobile banking is gaining legitimacy?

Sadly, yes.

There’s been a lot of talk here and in plenty of other places how mobile banking is being adopted more broadly by providers and consumers alike. With a little push on the innovation front, it’s likely to gain even more traction as the social media generation comes of age. Walking into financial institutions, or even sitting down in front of the PC, is too much work; let your phone or tablet do the banking. We’re surely about to see a plethora of mobile apps that enable us to deal with our finances in ways we never have before. As with every other shift in technology, this is turn will affect our behavior—perhaps even our attitude toward our personal finances.

The flip side to all this, of course, is the downside— a new breed of criminal that poaches on looser protection standards. The goal: to secure access to insecure data.

But again, as with the emergence of every new platform, form factor or application, security takes on a new urgency. The very point of mobile adoption is convenience—everything absolutely must get easier. Now, if something is easier, does that mean it’s automatically less secure?

Let’s hope not, but there’s more work involved to make that happen. Every financial institution is currently rushing products to market, knowing that there’s a huge potential audience for something customizable, unique and useful (so much easier said than done). But given the need for speed, is security getting the attention it should?

In an interview with BankInfoSecurity, Joe Rogalski, information security officer at New York-based First Niagara Bank, warns of the perils of this trade-off. He stresses that every product offering related to mobile banking—be it remote check deposit or just bill pay—needs to be evaluated from a fraud perspective before it goes to market.

But we all know that in the real world, getting there first can be more important than being the best. Is the threat of a serious data breach somewhere down the road worth losing critical market share now?

Just to be clear, even the PCI Security Standards Council is continually playing catch-up with regards to protocols and best practices—the whole field is still too new, and in perpetual motion, to set comprehensive standards. For their part, the bad guys have no trouble finding weaknesses and loopholes. For example, we’re only just starting to learn about a new breed of attack that fools consumers out of their SIM cards. (This mode should concern telecoms as much as FIs.) This is particularly troubling because SIM cards are the favored tool for securing mobile payments at many mobile payment schemes around the world, ironically because it gives the telecom provider more control.

The problem is that too much of this discussion remains in the theoretical realm, and belongs in the real world. So let’s take it as an article of faith that consumer adoption will continue to grow, that FIs will continue to push products out to market that makes diverse banking processes easier, and that criminal elements will use any tactic they can to steal access, steal data and steal money. Because they will.

Moving forward, we need ironclad guidelines, rock-solid processes and innovative technologies to (try and) stay one step ahead of the downside. Mobile banking is natural, beneficial and inevitable. It’s up to us to minimize the threats that emanate from it.

Filed Under For Financial Institutions Tagged With mobile apps, mobile banking, mobile security, tablet banking

Small Business, Big Lending

March 8, 2012 By Banking.com Staff Leave a Comment

After such a prolonged period of doom and gloom in the global economy, any uptick in lending from financial organizations is cause for celebration. Now maybe, just maybe, we’re headed that way.

First, the good news: Flush with deposits, banks around the world have money in their coffers. Next, the better news: They’re more inclined to make loans in 2012 than they have been for a while (as in, the recession). Finally, the best news: Small businesses, often seen as the true engine of growth, are likely to benefit the most.

That’s the word in a new report from Omega Performance Corp., based on a survey of 409 respondents around the world, and it offers an interesting snapshot of how bankers see the near future. And by all accounts, what they see is good. In fact, 69 percent of global bankers reported a positive outlook for the global economy over the course of the year. For the record, no one’s looking through rose-colored glasses just yet: Only 12 percent predict “drastic” improvement on a global scale, while 57.2 percent see it improving “slowly.”

It’s in the area of lending practices that we see the greatest changes. Well over half the banks surveyed forecast greater lending on the consumer front, and the numbers are even higher for EMEA. It’s an even better story on the commercial side, but this time, the outlook is rosier in the North America, particularly the U.S., with a whopping 72.5 percent.

Going one level deeper, there’s an even brighter spot. Nearly three-quarters of the respondents said that their financial institutions will increase small business lending. Of those, 61.1 percent will do it slowly, while 12.7 percent see a drastic jump. The corresponding numbers for the U.S. are even higher, collectively clocking in at 77 percent. In fact, this sector dominates the target markets for banks—76 percent globally, and 78 percent in the U.S. On a related note, more than two-thirds of respondents in the U.S. plan to actively pursue leading to mid-sized and larger business as well.

It’s not all good news: For example, construction and multi-family homes (considered bellwethers of the industry) still rate below credit cards and auto loans around the globe. As for individual housing, the number for Canada is significantly higher than the U.S.: 57.8 percent over 42 percent.

Again, like all surveys, this is just a snapshot in time. But considering the cascade of gloomy reports and dire forecasts that we’ve almost become accustomed to, any positive signs are welcome. Here’s hoping there are many more, and soon.

Filed Under For Financial Institutions, Surveys Tagged With small business, Small Business Lending

The Social (Payments) Network

March 7, 2012 By Banking.com Staff Leave a Comment

While Google’s privacy policy and user-tracking have been under the microscope recently, Facebook has been quietly acquiring money transmitter licenses from state agencies around the U.S.

Is Facebook gearing up to battle PayPal and the ever-growing list of companies in the payments space? Are they just preparing for the increased scrutiny that going public will bring? Or, perhaps they plan to revolutionize the financial service industry with their more than 845 million users worldwide?

The point is no one really knows.

A recent article in American Banker shined a light on the social network’s recent activity with state regulators, confirming at least 15 states have granted money transmitter licenses to Facebook. Facebook already maintains a digital currency, Facebook Credits, for use with Zynga’s Farmville and some of its other online games. Point being: Facebook is well positioned to provide person-to-person (P-to-P) money transfers with real-world currency.

What would a Facebook-based financial institution look like?

Well a lot like PayPal actually, but with more traffic – people updating their status, posting pictures, checking up on friends, etc. P-to-P transfers seem a natural fit. Banks have begun to offer P-to-P and need to take Facebook seriously as a competitor. Bank transfers can be as easy and convenient as simply entering the recipient’s email address and the amount to be transferred. If you are already logged in to Facebook, it could only take several clicks, eliminating the need to switch to a bank’s site or PayPal.

Currently, advertising space is the only product sold by Facebook. It stands to reason Mr. Zuckerberg and company would jump at the chance to squeeze more revenue from his website’s users. Taking a small percentage of the P-to-P transfers would generate additional revenue.

Facebook collects information about users, their preferences and activities on their site, giving them a huge advantage over other FIs. Only Google comes as close to compiling as much user information.

The popularity of the payment space continues to surge with a seemingly never-ending line of companies ready to compete for a piece of the market. Case in point: Retailers Walmart and Target recently announced that they, too, will soon launch a mobile payment system. Starbucks and Subway launched mobile payment solutions last year.

Retailers like to provide payment solutions because it enables them to offer special deals to customers, avoid paying costly transaction fees to FIs, and provide greater security than a multiple vendor system. Perhaps most important is the additional information about each consumer, which can be culled and analyzed in order to maximize sales from each individual and thus increasing the retailer’s revenue.

Questions remain about if and how Facebook would handle basic banking functions like deposits, interest, and fees, but FIs would be wise to prepare for competition from yet another company.

Filed Under For Financial Institutions Tagged With Facebook, PayPal, social banking, social media, social network
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