Financial services watchdog announces mobile banking report

FCA outlines the thematic work it is carrying out to better understand opportunities and risks associated with mobile banking

The Financial Conduct Authority (FCA) has outlined the thematic work it is carrying out to help it better understand the opportunity and risks associated with mobile banking in an interim report.

Following the increasing number of mobile banking services being launched, the FCA recognised the potential growth of mobile banking use in its 2012/13 Risk Outlook and 2013/14 Business Plan.

The FCA said it wants to support innovation while ensuring consumers are secure. It has also called for engagement with technology firms.

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.

“By publishing these initial thoughts we want to make sure that the industry knows exactly what we’re looking into and consumers have a clearer idea of some of the potential risks.”

According to Juniper Research, more than 1 billion global mobile phone users will used mobile banking services by the end of 2017, compared with just over 590 million this year.

The research will focus on the different ways consumers use banking services on mobile phones and tablet devices, and will focus on security.

“We aim to tackle potential risks to consumers at an early stage to prevent them from developing,” said the report.

To ensure the market works effectively and that consumers are protected, the FCA wants to ensure providers of suppliers implement measures including: “Testing the robustness of their IT systems, including transactional security, thoroughly stress test their products and store sensitive data securely.”

In 2012, the FCA carried out work to identify various risks to consumers. The interim report outlines the FCA’s fears of security and service continuity.

“Malware is an important risk for firms to consider, as it can result in financial loss and undermine consumer confidence in mobile banking,” it said.

"There is a risk that an IT failure could interrupt services, preventing access to mobile banking, limiting customers’ access to their money and undermining consumer confidence in these services. 

"The potential impact of this may grow as consumers increasingly rely on mobile banking. We recognise that firms may be under strong commercial pressure to develop and launch products quickly, which could risk services being released without sufficient testing and protection.”

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