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Safety a key issue for mobile banking

By Claes Bell ·
Wednesday, September 28, 2011
Posted: 1 pm ET

Mobile banking and mobile payments are looked at by a lot of people in the banking industry as the next big thing. Indeed, a new report by Javelin released this week shows that in the past 12 months, the percentage of mobile phone users who've banked on their mobile devices has grown from 19 percent to 30 percent.

From the report:

This is positive news for mobile banking vendors as it means that mobile banking is crossing the tipping point from a nice‐to‐have to a must‐have investment for the typical financial institution. The largest boost is seen in those conducting mobile banking in the past seven days, which increased 50 percent, from 12 percent in 2010 to 18 percent in 2011.

Still, it looks like security concerns are going to be a significant barrier to more widespread adoption, even among those comfortable with technology.

A new poll conducted by ThreatMetrix and The Ponemon Institute finds only 21 percent of active Internet users feel completely secure from fraud when banking on mobile devices. If that seems like a high threshold, it is. But it's also probably the threshold mobile banking will have to meet before it becomes the norm, because people are understandably really protective of their banking information.

Rounding out the poll, slightly less than half felt somewhat secure, 46 percent, felt somewhat protected, and 23 percent reporting they didn't feel protected at all. Of those surveyed, only 29 percent had conducted banking business over the mobile challenge.

The Javelin report echoes those numbers, with 45 percent of those surveyed saying the main reason they don't use mobile banking is fear that it isn't secure. Another key stat: Two-thirds of consumers believe that transacting on a mobile phone is less secure than on a computer or laptop.

All these numbers add up to a big problem for banks looking to reach the growing number of customers who own smartphones: they need to convince consumers mobile banking is safe, both through media outreach and by building in foolproof security to prevent the types of slip-ups that could prejudice people against the technology. As Javelin puts it, "The best vendors will build in strong security components from the start."

I think that's about right. If the banks want people to feel comfortable with mobile banking, they can't afford a highly visible Michaels-type fraud fiasco.

What do you think? Do you use mobile banking? Are you concerned about security issues?

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