City regulator to review mobile banking

Mobile phone and globe

Mobile banking - including contactless payments, financial transfers and online account access using smartphones and tablet computers - is to be reviewed by the Financial Conduct Authority (FCA) in the first half of next year.

The FCA will concentrate on fraud and security, as well as the risks of interruptions to mobile banking services as a result of systems failure or IT blips that freeze customers out of their accounts.

It will also look into anti-money laundering systems and controls.

The City regulator hopes the review will encourage mobile banking providers - high street banks and firms not traditionally associated with banking, such as mobile phone networks - to ensure their products and services are secure, reliable and straightforward to use.

Clive Adamson, director of supervision at the FCA, said: "Mobile banking is an exciting development in financial services, with increasing numbers of consumers attracted to the convenience of banking on the move. With the market growing, now is the right time for us to take stock and, as part of the FCA's forward looking approach, to ensure that consumers are appropriately protected."

FCA advice when using mobile banking

  • Reduce the risk of fraud by making sure should you lose your phone, someone else can't easily gain access to your bank account. Always set a passcode on for your handset.
  • Take extra care when typing on small keypads to enter correct account details when making payments.
  • Protect your phone against the possibility of downloading malware (malicious software) or viruses when loading a mobile banking product by using appropriate internet security measures. Don't open links from junk mail.

Have you had a bad experience of mobile banking? If so, share your story in the comment box below.

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Innovation in Financial Services

A post relating to this item from Finextra:

27 August, 2013 FCA kicks off review into mobile banking risks The UK's Financial Conduct Authority (FCA) has published an interim report exploring some early findings of a review into mobile banking services, setting out the possible risks to consumers and areas that firms should consider when developing their services.

FCA needs to think about mobile telecommunications
03 Sep, 2013 13:15
The UK's Financial Conduct Authority (FCA) has published an interim report exploring some early findings of a review into mobile banking services, setting out the possible risks to consumers and areas that firms should consider when developing their services.
When it comes to financial services, consumers want convenience and security. Mobile can deliver a strong value proposition here so it is inevitable that mobile banking services are attracting the FCA’s attention. Mobile is clearly at the centre of a revolution that is happening. This is logical as we have an intelligent, sophisticated device that is with us 24x7, be it their smartphone or tablet, consumers expect to be able to control their lives through this one device, for communication, work, shopping, watching films, playing games and listening to music. The attitude of consumers to banking and payments is no different, and why should it be? The mobile device is set to become the dominant device to enable a paradigm shift in traditional business models, and the device to enable new business models and experiences.
Mobile banking services appear in a number of forms, greater than that within the FCA scope, and includes balance checks, electronic statements, payee creation, inter and intra account transfers, P2P remittances, cardless ATM withdrawals, stored electronic cards, coupons and loyalty, NFC and Geo-fencing to name but some.
As some of these transactions and capabilities can carry considerable risk, fraudsters will certainly be drawn to the new way that we can make payments and quick to capitalise on any inherent weaknesses. As the payments space moves mobile we need suitable solutions for this new area; the FCA is right to engage early with the FS industry on that area.
Many of the mobile-based offerings available today provide little usable functionality, possibly due to weak registration processes, whilst others require onerous registration processes that are more aligned with other, traditional banking channels.
The trick, as is so often the case with electronic financial services, is finding the right balance between security and convenience. This needs to extend to the full lifecycle of the mobile banking app, not just the registration.
At ValidSoft we believe that as all mobile banking apps are inherently based on mobile telecommunications, so too should the security. Using a combination of visible and invisible techniques to create a layered, multi-factor approach is critical for both enrolment and the on-going authentication for high-risk transactions whilst creating a user-friendly experience.
In-band voice biometrics is an example of this approach, using the high-definition data channel for voice transport to create a low-friction but highly secure approach, with a trusted mobile phone number being all that’s required to securely enrol in the first place.
The solutions do exist today and I will look forward with interest to the final conclusions and detailed risk assessments arising from the FCA’s final report.