Security of Internet Banking (Part 1)

Brief Introduction to Internet Banking

Internet has become one of key role in bringing a new way of how we interact with other people and it has opened a new dimension in the way of doing business.

Internet banking allows customers to conduct their financial transaction via internet by visiting a web site. Internet banking has lot of functionalities which are specific to each banking application. But broadly the functions fall into several categories.

• Transactional (e.g., performing a financial transaction such as an account to account transfer, paying a bill, wire transfer, apply for a loan, new account, etc.)

1. Payments to third parties, including bill payments and telegraphic/wire transfers
2. Fund transfers between a customer's own transactional account and savings accounts
3. Investment purchase or sale
4. Loan applications and transactions, such as repayments of enrollments

• Non-transitional (e.g., online statements, cheque links, cobrowsing, chat)

1. Viewing recent transactions
2. Downloading bank statements, for example in PDF format
3. Viewing images of paid cheques

• Financial Institution Administration
• Management of multiple users having varying levels of authority
• Transaction approval process

Security Issue in Internet Banking

Dr.. David Chaum, CEO of DigiCash said that “Security is simply the protection of interests.People want to protect their own money and bank their own exposure. The role of government is to maintain the integrity of and confidence in the whole system. With electronic cash, just as with paper cash today, it will be the responsibility of government to protect against systemic risk. This is a serious role that cannot be left to the micro-economic interests of commercial organizations.”

The security of information is one of the biggest concerns of an Internet user. For Internet banking users and organizations such as banks with dedicated Internet connections face the risk of someone from the Internet gaining unauthorized access or sneak to their network. Especially due to the sensitive nature of the information changed the internet banking systems are highlighted targets. The Citibank $10 million break-in is one example of how the system is vulnerable to hackers.

Being vulnerable will make a bank to lose the trust of its customers and the brand reputation in the market.