With the rise in availability and intuitiveness of smartphone devices, more and more people opt for mobile bank applications as their go-to financial solutions. While they may be user-friendly, convenient and available on the fly, these applications are also more vulnerable and prone to scammers, malware, and other cyber intrusions.
According to a report published by McAfee, an average smartphone user has 60-90 applications installed on their phones while at the same time, studies have shown a 77% increase in mobile banking Trojans and exploitative apps disguised as mobile bank applications rear their heads on Play Store and App Store respectively. This makes it very easy for malicious apps, malware code, and phishing attempts to take place unbeknownst to the smartphone user.
Whether it’s social engineering threats, malicious code or disruptive companies aiming to take over the market with lucrative user offers, the mobile banking space is highly competitive and in a constant state of flux. Let’s take a look at several key items which may threaten the mobile banking going into 2020 and see if we can find a silver lining in the bottlenecks this market is facing.
The Beneficial Aspects of Mobile Banking
Let’s take a look at what makes mobile banking such a pivotal new direction for FinTech before we discuss the potential threats and detractors down the line. According to The Financial Brand, 46% of consumers rely on digital-only channels for socialization, purchases, and information among others, while 60% of users report that they use mobile banking in some capacity, which is up from 36% which was reported only four years ago.
There is a clear push for convenience and flexibility from both FinTech companies which facilitate banking as well as the end-users who happily use mobile banking in their everyday lives. However, this has opened the doors for unwanted attention and made the industry a target for hacker groups, other FinTech companies as well as government regulation given the mobile banking’s disruptive nature on the global market. With that said, there are several important advantages to mobile banking compared to traditional banking, including but not limited to:
- Secure, cloud-based client information storage
- Paperless, green banking
- Worldwide, 24/7 access to funds
- Streamlined client support and servicing provision
- Minimized client transfer and maintenance fees
Threats and Detractors in the Mobile Banking Market
- Low-Quality Competitors
Given the rising popularity of mobile banking on a global level, it’s no wonder that many companies and startups would try their hands at creating their own financial platforms. However, poor servicing, low-quality features and bad security can lead to very detrimental effects for the industry at large.
People that opt for mobile banking applications without due research might face badly designed platforms which will, at worst, cost them both time and resources. This can lead people to simply choose traditional banking institutions instead for the simple reason of ensured security of funds and services.
- Government Regulation
Mobile banking is cloud-based and networked across the globe, meaning that it can be difficult to enforce the same FinTech regulations by separate government bodies across the world. Once individual governments decide that mobile banking presents their countries with stability and monetary issues, they might opt for strict regulation for the industry.
This might result in various laws and regulations from country to country in regards to mobile banking, making the use of its services more trouble than it’s worth. As such, government regulation poses a serious (potential) threat to the mobile banking market, one that hasn’t been enforced or acted on significantly as of yet.
- Poorly-Protected Networks
The everyday use of mobile banking applications cannot be controlled by the companies behind them. Whether a client chooses to pay for coffee, an airplane ticket or casino chips with their account is entirely up to them.
However, poorly secured wifi networks, public internet places, and other mismanaged spots can lead to social engineering hacks and loss of monetary resources. Once an individual is hacked for simply using a mobile banking platform as it was intended, they might choose to go back to a traditional bank for the sheer sense of security it might provide.
- Scam Applications and Malware
Lastly, the most dangerous threat to mobile banking revolves around malicious software, hacker groups and autonomous malware code on the market. A less tech-savvy client might attempt to download a banking app from the Play Store or App Store without knowing which one is the legitimate choice.
Scam presents a dire threat both for mobile banking and smartphone security scene at large, making it highly important for individuals to think before they act. Scam applications, malicious links, and social engineering hacks via email or chat can be detected with simple deduction and should be deleted and/or ignored at all costs. Failing to do so can result in massive losses of personal data, financial information, and mobile banking funds, leading to a drop-off in the public trust in mobile banking.
Steps to Minimize Mobile Banking Threats
- Two-Step Authentication
Even though little can be done in terms of stopping the threats and detractors from going after the mobile banking market, we can still ensure the safety and stability of our client servicing.
One such step involves mandatory two-step authentication of any mobile banking activity, including log-in, transactions, information changes and new device access among others. Creating a secondary protective layer around each individual client will allow for an additional sense of security and trust in the mobile banking platform and minimize the threat of malicious hacking.
- Client Information Encryption
When it comes to the back-end data storage and security, client information should be encrypted at all times. Even if a breach happens and malware does manage to access sensitive information, enforcing an encryption protocol on the client data will render the attempt fruitless.
You can settle for in-house IT security or opt for a professional security agency or platform which will help you encrypt client data for the sake of privacy and protection. This will add to the image of professionalism and reliability in mobile banking in the eyes of clients and public at large going forward.
- Email/Message Alerts
In order to ensure that every client has as much control over their mobile banking accounts as possible, automated alerts should be introduced. These alerts can let your clients know of any activity, log-in attempts, data changes or updates in regards to their accounts in your mobile banking platform.
While they might come off as spam at first, these alerts are highly useful in ensuring that no other individual has access to any single account other than the owner themselves, further cementing their sense of trust and security in your platform.
- Constant Market Vigilance
Lastly, just like the traditional banking and FinTech industry, the mobile banking market is in a constant state of growth, development, and innovation. The same can be said about malware, hacker groups, competitors and government regulation just the same.
It’s essential that you stay in touch with the current industry shifts, new trends, potential threats and any indication of possible security concerns in regards to your platform at all times. This will ensure that you are always on top of any new information or happening in your industry, allowing you to implement security patches, infrastructure upgrades and preemptive changes to the banking platform through informed more decisions.
Mobile Banking Under Pressure (Conclusion)
Whether you already have a stake in the mobile banking market or are looking for viability and development information before moving forward with your own platform, it’s important to take both sides of the equation into consideration. While there may be threats and potential bottlenecks in the industry, there is also a multitude of benefits and opportunities in managing your own mobile banking platform. One could argue that the industry is still in its infancy and has yet to come into fruition as smartphones, internet, and cloud-based technologies develop at a rapid pace. Make sure to keep an eye out on this niche of FinTech for potential investment opportunities and you will undoubtedly discover interesting trends as we move into 2020 and beyond.
Bio: Angela Baker is a self-driven specialist who is currently working as a freelance writer at writing services such as WoWGrade and Supreme Dissertations where she tries to improve herself and her blogging career. She seeks to discover new ways of personal and professional growth and is convinced that it’s important to broaden one’s horizons. That's why Angela aims to develop and improve her skills throughout writing to help to inspire people. Also, she writes for LiveInspiredMagazine.