Kaspersky Lab announced today the results of a survey, conducted in partnership with IDC Financial Insights, which found that banking customers are hesitant to use mobile features due to fraud and security concerns. The findings show that of those not using mobile banking at all today (36 per cent), more than half of them (74 per cent) cited security as the major reason, which could slow the overall adoption of mobile banking services during a time where mobile device usage is exploding.
Kaspersky Lab sponsored the survey and resulting white paper with IDC Financial Insights. The survey included 1,015 individuals with 515 from the United States and 500 from the United Kingdom, and it focused on discerning the opinions and attitudes toward mobile banking among active and non-active mobile users.
While security concerns are holding back non-mobile banking users from embracing the convenient, digital self-service solutions on the market, those who are active users of mobile banking today also share the same concerns. Of both, users and non-users of mobile banking, 85 per cent said that they would increase their usage to “some extent” if there was more security and nearly half (44 per cent) of those surveyed said that they would “significantly” increase their mobile banking usage with more security.
For financial organisations, an increase in self-service banking usage can drive revenue and reduce transactional costs, but currently customers don’t see a promising future for mobile banking in their lives – with 32 per cent of respondents claiming that they do not ever foresee using mobile as the primary channel that they will engage with their bank or credit union. Banks that do not properly strengthen mobile financial security measures could miss out on a significant business opportunity and risk losing valuable customers in the process.
As financial institutions look for new ways to streamline adoption of self-service banking solutions, it is important that they proactively deploy and implement rigorous security solutions. In addition, banks should also reconsider their education strategies to ensure that customers understand the level of security in their mobile offerings. Survey Respondents want to see a proactive and informative approach to security from their banks with 80 per cent indicating that they would like to see evidence of security measures being activated when they launch a mobile banking application.
“Consumers are concerned about security on their mobile devices, which has limited adoption of high margin mobile banking and payment activities including account opening, payments and transfers using a mobile phone,” says Marc DeCastro, research director IDC Financial Insights. “As the next generation of online, mobile first and mobile only customers begin to explore digital banking choices, financial institutions that have and promote stronger security will attract and retain these customers more easily than those who do not.”
“As financial organisations continue to expand their self-service offerings to drive revenue and increase customer convenience, it’s important to proactively approach security technology for consumers’ mobile devices in the same way banks approach security for their own PC-based solutions, web offerings, and technology networks,” said Ross Hogan, Kaspersky Lab Global Head of Fraud Prevention. “Recently, we’ve seen an increase in the number of leading financial organisations in the industry that have been fined or penalised for not meeting fraud and compliance regulations. In April, the Federal Financial Institutions Examination Council (FFIEC) released an update to the Examiner’s Handbook outlining risk management expectations for banks offering mobile financial services. Violations of these new mobile security standards have the potential to damage the reputation of banks and may raise the security concerns of customers to an even higher level than they are today.”
Commenting on this research, Ryan Wilk, director at NuData Security said “We’re not at all surprised to see this reluctance on the part of consumers to adopt mobile banking wholeheartedly. It’s entirely understandable given the onslaught of daily stories about breaches, and the growing awareness about the security vulnerabilities of many mobile apps.
Consumers are gradually being schooled in online security, even if it is by getting their hands burned first. According to the new ACI 2016 Fraud Report, almost one in three UK consumers (29%) has been a victim of card fraud in the last five years, with much of that fraud perpetrated by fraudsters who made online purchases using hacked or stolen card details. Just as chilling, is the figure that a full 17% have been victimised multiple times.
Perhaps customers are learning from these negative experiences, or it might be a trust issue. They likely fear that banks really don’t have control of their mobile security, or a combination of both.
What’s concerning to us is the finding that 44% of those surveyed would significantly increase their mobile banking usage with more security. In general, we’d be in favour, provided this security is actual security and not just more “security theatre” as we’ve seen time and time again. By this, we mean that adding more single-modal endpoint security layers are likely to just add more and more friction into the process and have marginal fraud prevention impacts.
Instead of layering on more solutions that will continue to provide limited data, FI’s can see this study as an opportunity. It’s clear that customers actually want real security. This means looking at the entire lifecycle of the account and continuously identifying patterns of behaviour that indicate fraud. Understanding how good customers behave will enable them to address these customer fears and concerns.
The good news is that these solutions are readily available on the market and are positioned to help banks provide winning customer experiences, improve their rates of false declines and lower account-based fraud.”
