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Bank branches disappear as online money tree grows

Old bank branch for sale.

A quarter of Ulster Bank’s transactions are conducted on a mobile device today, compared with less than one percent just two years ago, and only 16 percent of transactions are conducted in brick-and-mortar locations, reports the Belfast Telegraph. As a result, bank branches are closing as customers demand immediate transactions rather than long lines for teller service. While the shift to virtual growth offers high returns with lower capital investment, banks now face the challenge of increased consumer expectations.

Branching out

Though online banking is on the rise, not all account holders are pleased. Pew Research reports that 51 percent of U.S. adults bank online and 32 percent do so on their mobile phones, and according to the Wall Street Journal, U.S. financial institutions shut the doors of over 2,000 bank branches in 2012. TCF National Bank of Wayzata, Minn., plans to close 37 supermarket branches this year, while the 1,024 residents of Athens, Mich., are without a bank for the first time in over 75 years after their local Southern Michigan Bank and Trust closed in 2011. Online banking critics argue that although closing small-town branches is cost-effective given current in-person customer volumes, it can also negatively impact account holders who don’t have a mobile device or reliable broadband access.

While banks must convince disenfranchised retail customers that online banking offers a viable alternative to bank branches, tellers, and ATMs, they must also address security problems. The move to convenient virtual transactions, including the ability to scan and deposit checks or log into accounts from anywhere, presents unique challenges. Scanned checks, for example, might be deposited online into one account and then deposited physically to another, allowing criminals to “double dip.”

According to a recent American Banker article, online banking scams are difficult for customers to detect — as a result, banks need to develop a “code of conduct” that clearly spells out how they will get in contact with account holders and what kind of security measures will be put into place to protect users against fraudulent transactions. One option is to upgrade banking websites so they include support for technologies such as HTTPS Strict Transport Security, which allows bank servers to tell Internet browsers that any connection between the two should be encrypted. If it’s not, an attack is likely taking place.

Social banking

Along with boosting customer confidence, banks also need to look for ways to make access easier. According to Live Mint, social media-enabled banking is on the rise in India, where at least two private banks now allow users access to banking functions via social media.

In September 2013, ICICI Bank gave consumers the ability to transfer money using a Facebook-based application, and in March 2014, Kotak Mahindra Bank made it possible for customers to open new accounts and access basic bank transactions using their Facebook log-in credentials. The bank estimates that in the next three to five years, 30 percent to 40 percent of all new accounts will be opened using social media. In the first year of service, it expects to double the number of online-created accounts.

Nitin Chugh of HDFC Bank notes that in addition to improved account holder access, financial institutions also benefit from lower costs. He estimates that the total cost of online alternatives are 25 percent to 30 percent lower than transaction costs, since there is no paperwork and no additional costs such as couriers or excess man-hours.

Backing the banks

Of course, the move away from physical bank branches to online transactions bolstered by intelligent security measures and accessed via social media falls flat if banks can’t keep up with consumer demand. For example, Facebook claims to have over a billion users worldwide, while Twitter has more than 240 million active accounts. Coupled with the hundreds of millions of adults in the United States who bank using “traditional” Web portals or mobile applications, it is critical for banks to deliver content on demand and in real time. Just like security, speed is essential for the growth of online banking.

Banks face two challenges. First, they need a way to securely authenticate user log-ins without sacrificing speed, no matter whether an account holder is logging in from down the street or across the globe. In addition, banks must be able to call up account information and transaction services on demand — if made to wait more than a few minutes, consumers may lose faith in a bank’s ability to provide secure services and will take their business elsewhere.

To effectively cope with the rise of online and social media banking, financial institutions are well-served by partnering with reliable, global content delivery networks (CDNs), which take the burden off local servers and ensure speedy response times from anywhere in the world.

As branches close across the country and banks respond to user demand for better online services, they require a combination of robust security, easy access, and smooth content delivery.

Photo credit: Wikimedia Commons

Online bank security becomes vital as hacking incidents increase

Banking Security

As e-commerce and online banking become more commonplace, the importance of cybersecurity cannot be overstated. Hacking incidents continue to garner publicity and press, and many people have either been victims themselves or know someone who has been exploited by identity theft or some other form of online fraud. This places the onus on financial services firms to spend significant efforts ensuring their online bank security systems are state of the art.

A closer look at the threats to online banking

The types of cyberthreats to Internet banking and e-commerce companies are wide-ranging and constantly evolving. Firms that provide online banking security consistently play a game of catch-up with hackers and other groups involved in nefarious cyberactivity. Notably in mid-March, three individuals were indicted on an array of charges, including wire fraud, access device fraud, and aggravated identity theft.

Many customers of the leading names in finance were targeted by these individuals’ alleged scheme. Citibank, E*Trade, JPMorgan Chase, Nordstrom Bank, PayPal, TD Ameritrade, and USAA were all victimized, as accounts were surreptitiously accessed, then funds were diverted to debit cards and bank accounts controlled by the alleged criminals. Identity theft was leveraged to file fraudulent tax returns to the IRS and help cash out the stolen funds.

Alan Brill, a senior managing director at risk advisory firm Kroll Solutions, told Bank Info Security that enhancing bank security with defensive measures plays an important role in preventing these kinds of crimes. He said he feels these security improvements need to be tailored to better handle the specific types of cyberfraud noted in this case. Financial service companies that are looking to enhance their mobile banking presence need to be acutely aware of the risks from individuals and groups making cyberthreats.

Newly developed malware is a continuing risk

The Trojan horse piece of malware known as Zeus strikes fear in the hearts of many IT personnel responsible for online bank security. Fresh attack techniques devised by hackers are making Zeus even more difficult to detect. The malware stays hidden inside banking systems as well as customers’ computers, allowing hackers easy access to valuable financial information and customer records.

These new hacking methods appear to be related to the same techniques used to infiltrate POS terminals and computer systems at some large retail establishments. The cybercrime against Target struck fear in many shoppers during the recent holiday season. Cybersecurity researchers continue to note the growing similarity between POS and computer hacking, possibly because criminals are sharing information on techniques.

Mobile device proliferation is another important factor in cybersecurity

With more consumers leveraging mobile devices and websites to conduct banking and other financial activity, bank security initiatives must take into account that customers want to access their accounts and perform transactions wherever they are. The cybercriminals in the case described earlier allegedly used hacked mobile devices as one of the methods to compromise online bank security and access customer’s financial accounts.

Microsoft’s move to discontinue support for Windows XP opens yet another pathway for hackers to gain access to customer passwords and vital financial data, especially considering that many consumers still use Microsoft’s older operating system to access bank websites.

Nonetheless, the customer is always right — so to speak — and if they want to conduct financial activity from a computer, smartphone, or tablet of their choice, it is up to the financial services company to ensure their bank security is capable of protecting them. As criminals and hackers share information, it is important that the people on the front line of the cybersecurity battle also share valuable data on protection techniques and malware detection. Additionally, working with a content delivery network (CDN) helps ensure websites and other online assets enjoy state-of-the-art protection.

The benefits of a CDN for bank security

Partnering with an industry-leading CDN is an important part of a bank’s arsenal against cybercrime. Token-based authentication using information secured by a MD5 hash ensures that only the proper users are able to access valuable banking systems. SSL certificates encrypt all data transmitted to and from a banking website, whether it is accessed from a computer or a mobile device.

Referrer blocking keeps out HTTP requests originating from anywhere other than the bank’s website and also lets IT personnel allow requests from other domains of their choosing. A robust reporting engine allows detailed tracking of any forensic data should a problem ever arise. Other useful features, such as access to the Internet’s most important peering points, mean that bank customers are able to access the website quickly and seamlessly, no matter their location.

Thoughtful and detailed bank security is a must for any financial services company. Keeping out hackers while allowing a wide range of functionality and convenient access remains the ultimate goal. Choosing a top-ranked CDN as a technology partner helps banks achieve these goals.

Photo credit: Wikimedia Commons

The best mobile banking apps: What makes them work?

Mobile Banking App Screenshot

Over the past decade, consumers have been increasingly conducting much of their banking and e-commerce activity online. In the past few years, online banking services, driven by the advancements in mobile technology and software, have migrated from desktops and laptops to smartphones and tablet computers. Offering a robust banking app is a big differentiator between competing financial institutions.

So what are the best mobile banking apps, and what features make them stand out among the also-rans? On the other hand, what are some missteps banks are making when developing their mobile software? Let’s take a look at the haves and have-nots when it comes to mobile banking.

Shining a light on the best mobile banking apps

The leading apps for conducting banking activities share three main attributes. Ease of use is probably the leading factor: If a banking app has a poorly designed, confusing interface, customers will either use the bank’s website or leave for another bank with a well-designed app. An attractive app design contributes to the overall usability of a banking app; one could say that these two factors are essentially one in the same.

Finally, a collection of robust features allows the best mobile banking apps to stand out from the pack. The ability to make a deposit using a smartphone or tablet by simply taking a photo of a check is a feature that is often highlighted in banking advertisements. Location-based coupons or rewards are some other features customers can enjoy; the American Express mobile app is known for this feature.

Banks that are primarily focused on mobile services tend to provide a better experience for their customers. BBVA Compass actually lets customers sign up for mobile banking without having to enroll in the bank’s online services beforehand. This is a great feature for customers always on the go who rarely find themselves in front of a computer screen.

Other innovative features offered in the best mobile banking apps include voice recognition functionality that allows users to pay bills by speaking into the app and ATM locators to help customers find banking locations on their smartphone when traveling.

Supporting alternative mobile platforms

While the Android and iOS platforms remain dominant in the mobile space, some financial companies have earned accolades by offering support for alternative platforms. Bank of America recently introduced a Windows 8 app optimized for Microsoft’s new touch screen interface. BBVA also built an app specifically for the Kindle Fire, a platform largely based on Android but with notable differences.

It is important for banks not to force customers into a mobile platform choice. Support for as many platforms as possible, including BlackBerry and Windows 8, gives more consumers the option of using a bank’s mobile services.

Smaller banks with winning mobile features

The best mobile banking apps aren’t limited to financial services giants: Smaller firms also build quality mobile banking experiences. City Bank Texas allows customers to deactivate a potentially fraudulent debit card by flicking a switch, to access balance info without logging in, and to unblock foreign transactions easily.

Mercantile Bank of Michigan entered into a partnership with PayPal — the first ever in mobile banking — and linked its app with personal financial management software. Adding support for mobile video technology is another innovation sure to please their customer base.

Mobile banking app missteps annoy customers

Mobile Banking App Screenshot

Though it’s important that banks provide innovative mobile features to their customers, they also need to get the simple things right. A Harris Interactive mobile banking survey revealed that a slow-loading mobile bank website would drive 28 percent of all customers to a competitor’s Web page, and 18 percent of users would never return.

Seventy-two percent of those surveyed want a mobile banking experience that works all the time. Nearly two-thirds want an app that is fast and responsive. Excellent mobile app user interface programming is able to provide a responsive experience to customers, but banks need to ensure their websites and back-end processes run quickly.

It is necessary for banks and financial service companies to take the right steps to ensure their mobile apps are responsive. In many cases, partnering with a content delivery network (CDN) is a smart move that allows the fastest possible experience for mobile users.

What a content delivery network provides for mobile banking

The industry’s leading CDNs are able to accelerate website and mobile app delivery in a variety of ways. Offloading images and other content from a bank website’s infrastructure improves the efficiency of content delivery. TCP-anycast routing gets mobile websites to a customer’s smartphone or tablet securely at blazing speeds. Providing access to the Internet’s leading peering points ensures fast content delivery no matter the user’s location.

A 100 percent service level agreement means a mobile banking app works all the time. Seamless scalability means that as a bank’s customer base grows, their mobile website and banking apps still provide top-of-the-line performance.

As mobile banking continues to grow in user acceptance, the smart financial service companies make sure their customers get the best possible experience from mobile apps and websites. Working with a content delivery network helps to make this synergy possible.

Photo credit: Wikimedia Commons

Improve online bill pay reliability with a CDN

By using a CDN to power your online bill pay services, you can improve banking reliability and reduce technical overhead significantly.

One of the most widely utilized services of online banking is online bill pay services. Although the concept is fairly simple—providing users with the ability to send funds to service providers with the click of a mouse—the systems that power such features can be challenging to maintain. This is because, when processing financial transactions for customers, banks need to ensure that their systems are fail-proof in order to maintain compliance with industry regulations.

Dealing with multiple regions

Since your customers can access online banking services in any location—a friend’s house, waiting for the subway, even an isolated beach—providing reliable service can be a daunting task. Whether you’re a small bank that only accepts clients in a limited region or you’re running an international institution, customers today want to access their funds quickly and securely regardless of their location.

In the past, catering to multiple regions would require access to multiple data centers and expensive servers. But thanks to content delivery networks (CDNs), businesses can enjoy a global reach for a fraction of what a dedicated server would cost per month. The biggest advantage of CDNs is that users can pay as they go, and you only need to purchase access to the servers you need. For example, if your bank only has clients in the United States, you can forgo purchasing CDN access in Europe and Asia. On the other hand, if you have clients located throughout the world, you can purchase CDN access on virtually every major continent.

How to choose a CDN provider

Most CDN vendors for your online bill pay systems will provide dedicated staff to handle integrating the service, regardless of whether the client has an in-house IT team. This ensures that internal staff can continue to focus on mission-critical work, while the CDN vendor focuses primarily on ensuring that the client receives the services they are paying for. One of the most important things to keep in mind with CDN providers is that they are typically pay-as-you-go, meaning that customers are rarely locked into a long-term commitment.

Photo credit: morgueFile