The Financial Services Authority is urging high street
banks to work with their online customers to fight
fraud.
The financial industry watchdog warned that the public’s
confidence in internet banking was fragile, with more than half the
public feeling concerned about fraud risks.
According to figures from payment association Apacs, UK banks
lost £14.5m through internet fraud in the six months to June 2005 –
a 300% increase on the same period in 2004.
Research by the FSA found that 5% of online banking users had no
security software on their PC, citing reasons such as cost, the
belief they did not need it, or that they did not understand what
it was.
Among those customers that did have security software, 25%
either updated it infrequently or did not know when they last
updated it.
The findings will add to the pressure on banks to take action.
Several banks, including Lloyds TSB, are experimenting with
two-factor authentication to improve security, and Apacs has
produced standards on two-factor authentication.
Other security initiatives include Barclays offering online
banking customers discounted F.Secure software via the Barclays
website.
Nationwide has told its online customers that any e-mail sent
from the building society would include a bitmap image featuring
the customer’s postcode.
“If consumers were asked to foot the bill for internet banking
fraud losses, our research shows they would stop using the tool,”
said Philip Robinson, financial crime leader at the FSA.
“To tackle the losses associated with fraud, banks should
continue to drive security and this must include educating
consumers on the importance of protecting themselves,” he said.