With the head-spinning global rise of digital banking, questions about the safety and security measures of mobile banking and e-money platforms emerge.
In today’s digital age, alternatives to traditional banking and banking apps have rapidly grown in popularity. People all over the world are getting used to the convenience that fintech platforms and mobile apps offer, and customers love the fact that they can manage their money on their terms, without visiting a bank branch and dealing with paperwork.
Yet, many people have security-related concerns and think that online solutions and mobile apps fail to take the necessary measures to safeguard personal and financial data. And in most cases, they’re wrong.
Although not all e-money platforms and mobile apps are created equal, most financial institutions use breakthrough technologies and advanced mechanisms to guarantee rock-solid security to consumers. This helpful guide explains the measures that financial institutions take to keep your money and personal data safe.
Identifying customers with KYC procedures
KYC stands for Know Your Customer and is a set of procedures and processes for identifying and verifying customers in accordance with the EU’s new regulatory requirements. But how does it work and why is it important?
Online-only banks and fintech companies providing financial services are required to confirm the customer identity in advance of account opening. The identification is made online, usually via a short video chat or by taking a passport photo and a selfie.
But no matter how it’s done, the identity check is essential in the fight against fraud and identity theft.
With the number of identity theft cases soaring each year – according to Cifas, there were 174,523 incidents in 2017 in the UK – the video identification chat plays an important role for both fintechs and consumers. With the video chat, you can be sure that even if someone has obtained your ID information, they cannot open an account in your name, because during the video chat they actually have to talk to an operator, in real time.
The extra security of two-factor authentication
Also known as a two-step verification, the two-factor authentication is widely used and adds an extra layer of security when you log in to your account and make transactions.
It works quite simply – when you log in to your account, along with your password you’re required to enter a unique, one-time passcode which arrives by SMS on your mobile phone. This way even if someone has your password, they cannot access your account or make transactions without the passcode. Each passcode can be used only once and you’ll get a new code every time you log in or make a payment.
Alternatively, you can use a mobile app, such as Gatekeeper, to generate the codes rather than getting them texted to you.
The rise in biometric identification
Biometric identification is considered one of the most powerful weapons that fintech companies use to prevent fraud and cybercrime. It utilizes biological traits – fingerprint, voice patterns, eye retina – to authorize access and validate transactions. Compared to passwords, biometric identification is way more user-friendly and secure, mainly because passwords are often hard to remember and may cause other security vulnerabilities.
While fingerprint scan is the most widespread biometric solution at the moment, we expect to see an increase of voice and facial recognition, too.
Card locking features
To add an extra layer of security, fintech companies such as LeoPay allow you to lock your debit card when you’re not planning to use it or if it’s has been lost, misplaced or stolen. This helps you ensure that you get the best protection for your money even if your card is stolen.
Aside from the locking feature, you can also disable certain types of operations. For instance, you can deactivate online transactions with your card while you’re abroad or forbid ATM withdrawals if you use the card mostly for online shopping.
Security will probably remain banking customers’ concern for a long time. Yet, with the technological advancements and security mechanisms that financial institutions adopt, you can rest assured that your data is safe.