Online Banking - Trust and Security

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Online Banking Systems - Security and Customer Trust

Introduction to Online banking has revolutionized the way people and business used to do banking. Internet and mobile equipments have made possible for the customers to do transactions and other banking related operations, anytime, anywhere. This paper is a research done on the customer issues related to internet banking. The first part of the essay talks about the need of internet banking and the benefits both organization and the customer gain from the service. Then it talks about the common types of risks associated with the internet banking. The final part of the essay concentrates on the customer trust and worries regarding the online banking and the general security steps to be taken to protect the system and the customer trust. Keywords: Internet/Online Banking, Customer Trust, Security, Internet 1.Introduction

Introduction to Online banking has revolutionized the way people and business used to do banking. Online banking became an easier and comfortable method to carry out transactions as compared to the traditional banking practices. Moreover introduction to mobile banking has made possible for the customers to do transactions and other banking related operations, with the help of the mobile equipments, round the clock. However, the medium chosen for online banking is the internet and all the vulnerabilities of the internet apply for the online banking systems. Even though banks providing internet banking facilities claims to have secured online systems, the customer concerns on security is still an open issue. European Internet Security Survey conducted by Entrust (2005) reports that 83% of individuals in the UK, 72% in Germany and 80% of North Americans are concerned with identity theft attacks on their online banking accounts. Moreover, the “Get Safe Online survey” reports that despite of using various virus protection software and PC security suite, 21% of surveyed online individual users were victims of identity theft attacks and 22% for phishing (GetSafeOnline, 2009). Online banking provides a higher level of convenience to individuals and organisations to manage their finance, but privacy protection and financial security has become an ongoing concern (Srivastava, 2009). Moreover, according to Grabner-Krӓuter and Faullant (2008) even though the number of people using the internet has increased these days, there is no considerable increase in the number of users adopting internet banking. A survey conducted by Deutsche bank on internet banking users in Europe reveals that even though 70-80% of internet users in Norway and Finland use online banking, the proportion are just about 40% in Germany and Austria and less than 10% in Greece and Romania (Meyer, 2006). In the further research the reason for people’s reluctance for online banking will be discussed. 2.Need for Online Banking

The increasing popularity of the internet has attracted more industries to do business online, and the entry of banking industry to this online world was with the introduction of online banking. Changing technology, customer preferences and competitiveness has supplemented the need of Internet Banking for banks (Russel, 2007). Moreover online banking is considered as very powerful tools that can add value to the business and attract and retain new customers and improve competitiveness (Rotchanakitumnuai and Speece, 2003). Banks find it an advantage to have online banking as it will help to cut costs on resources and infrastructure. For example, ‘Citibank which is one of the leading financial institutions has only 4 locations in the whole of England. All the four are in London, however the number of customers Citibank has in London is enormous’ (Management-Hub). Citibank has succeeded in building a strong customer base, with the use of online banking despite the less number of branches. Having an online banking system may reduce the number of customers...
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