Community Service with the Personal Touch

September 23, 2014
/   Insights

Question: Community branch, personal service, mobile banking—which is the odd one out? Answer: None. Otherwise, the industry is in trouble. For some time now, there have been discussions about the future of community banks...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Platform Shift in the Making

February 13, 2013
/   Insights

What does the banking industry as a whole have to do with Amazon, Microsoft and Apple? Just about nothing—and down the road, it may turn into a major problem (if it isn’t already). Consider...

Financial Literacy Month: How are you celebrating?

March 22, 2013
/   Insights

With April approaching, it’s almost time to kick off Financial Literacy Month! Strongly supported by the United States Congress and the Financial Literacy and Education Commission, Financial Literacy Month aims to promote the importance...

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

 “Don’t mistake activity with achievement.”
– John Wooden, former UCLA basketball coach and 10-time NCAA Basketball Champion

Target, Neiman Marcus and Michaels recently compromised sensitive customer data to hackers, joining Facebook, Gmail, Twitter, and Yahoo!. And those are the ones made public.

Financial institutions (FIs) aren’t safe either: Global Payments (processor for Visa and MasterCard), Bank of America, Citibank, JP Morgan, and Fidelity National Information Services all suffered data breaches recently. Hundreds of millions of dollars stolen and boatloads of personal data exposed to criminals.

Companies, especially FIs, are not doing enough to safeguard sensitive information. FIs scramble to buttress their systems to thwart attacks, while criminals easily elude the safeguards.

If you shop online your information could already be on a hacker’s hard drive, waiting to be bundled and sold to another criminal, making you vulnerable to identity theft and other crimes.

The protection plans offered by credit card companies and FIs do provide additional protection. But, it isn’t enough, and why would consumers pay for safeguards that should be provided automatically? Especially when the “safeguards” aren’t really all that safe.

EMV (Eurocard, MasterCard, Visa) (covered on this blog) would be a step in the right direction, erecting additional layers of protection between FIs and hackers. EMV has been adopted by most of the world, but not in the U.S.

EMV replaces the magnetic strip on cards with a microchip used for authentication and  encrypts the information during the transaction, making it more difficult for thieves and card skimmers to steal. Security is further bolstered when used with a PIN or signature. It is by no means a panacea.

Retina scans and fingerprints could also thwart criminals. Those systems require expensive investment in hardware and new software to support them. FIs and their customers should implement anything that makes it more difficult for hackers.

Dual-factor authentication (2FA) is another, more feasible, option. It adds another level to the standard password login. The FI would send a code via text message to one’s mobile phone, which then is entered by the user to execute the transaction.

Ninety-one percent of Americans already have a mobile phone, according to Pew Research. Convenience alone makes 2FA via text message a logical solution.

Sending out text message codes would require investment in software, but the cost would be meager compared to implementing a scanner or other hardware solution. Twitter, Google and Facebook already support 2FA as an option at login. It should be made mandatory.

2FA has been around for decades but never took hold. If a mobile phone was compromised though, it would carry frightening ramifications. And transactions are still susceptible to Trojan horses, Man-in-the-Middle attacks, and other malware. In fact, all computers are vulnerable to these types of attacks.

Tokens like RSA’s SecurID, 1Password, Toopher, YubiKey and the like that provide one-time passwords have weak points as well, which can serve as gateways for criminals. If breached, they would expose all users’ passwords at once. Not good, and hardly safe.

So what’s the answer?

Disappointingly there isn’t one that ensures total protection in all situations. Hackers are clever and will continue to exploit weaknesses in any, and every, system.

2FA is easy to implement with current technology and is a formidable additional security layer.

Coach Wooden said, “Do not let what you cannot do interfere with what you can do.” FIs need to heed this advice.

About David Sutton: David 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.

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Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp

James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.