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Security Concerns Holding Back Mobile Banking Adoption

Fraud and security concerns are holding back adoption of mobile banking technologies, according to a new survey.

The research, carried out by Kaspersky Lab and IDC Financial Insights found that 36% of respondents are not currently using any mobile banking apps. Of these, 74% cited security as the primary reason.

The research also suggested that many people will never adopt mobile applications as their primary banking platform. Nearly one-third of respondents said they do not ever foresee using mobile as the primary channel.

It is security that remains the primary concern, and the main reason people are not adopting mobile banking. The survey found that if there was a more visible way of adding security to mobile banking apps, people would be more open to using them. For example, 85% of respondents said they would increase their usage “to some extent” if there was more security associated with mobile banking, while 44% said their usage would increase “significantly” in the same scenario.

“Consumers are concerned about security on their mobile devices, which has limited adoption of high margin mobile banking and payment activities including account opening, payments and transfers using a mobile phone,” said Marc DeCastro, research director IDC Financial Insights.

DeCastro added that financial institutions that promote security within their mobile apps are likely to see increased usage. “As the next generation of online, mobile first and mobile only customers begin to explore digital banking choices, financial institutions that have and promote stronger security will attract and retain these customers more easily than those who do not,” he said.

Ross Hogan, Kaspersky Lab global head of fraud prevention, said banks should approach mobile application security in the same way they approach the more traditional platforms such as web-based applications. Not only will that help them attract and retain customers, but it will also help with regulatory issues.

“Recently, we’ve seen an increase in the number of leading financial organizations in the industry that have been fined or penalized for not meeting fraud and compliance regulations,” he said. “Violations of these new mobile security standards have the potential to damage the reputation of banks and may raise the security concerns of customers to an even higher level than they are today.”

Ryan Wilk, director at NuData Security, said that banks should make sure their security approaches are not just a show for the customers. “What’s concerning to us is the finding that 44% of those surveyed would significantly increase their mobile banking usage with more security. In general, we’d be in favour, provided this security is actual security and not just more “security theatre” as we’ve seen time and time again. By this, we mean that adding more single-modal endpoint security layers are likely to just add more and more friction into the process and have marginal fraud prevention impacts,” he said.

“Instead of layering on more solutions that will continue to provide limited data, FI’s can see this study as an opportunity. It’s clear that customers actually want real security. This means looking at the entire lifecycle of the account and continuously identifying patterns of behaviour that indicate fraud,” Wilk added.

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