Security & Fraud

Digital Channels Making Banks More Vulnerable To Scams

SAS, the analytics company, and Javelin Strategy & Research, the market research company, found in their “2016 Digital Channel Threat Report: Derisking Convenience” that digital channels are opening up unanticipated points of weakness for banks.

According to a press release highlighting the results of the study, the two companies said EMV, otherwise known as chip cards, are protecting customers from physical card fraud, but the increase in digital channels is enabling other non-card scams to arise. With the “seemingly endless” number of digital options, there are alternative routes for the bad guys to commit fraud, they said.

What’s more, the companies found that mobile wallets, which will only see an uptick in popularity in the coming years, will create opportunities for banks to gain and keep customers by offering bank-branded mobile wallets and services. But those same banks could lose customers if they aren’t as tech-savvy as their competitors. The appeal of mobile wallets, which the firms predicted by 2019 will be in the close to 90 million-user range, is also attractive to scammers. “The rapidly expanding capability to use a mobile device for transactions makes a stolen smartphone worth more on the black market,” said the companies in the release. “Then, there’s ‘wallet takeover’ or ‘device takeover’ — when an unauthorized party logs into a financial account in a mobile wallet or installs an existing wallet on their own device. Because the fraudster is now in control of communication channels for the account, regaining control of that account is particularly challenging.”

The report also discovered that there is an increased awareness on the part of consumers dealing with the personal security of their banking data, with 46 percent of survey respondents saying they personally bear the most responsibility for preventing fraud. Only 17 percent placed most of the responsibility on financial institutions. The report noted that, even though consumers are responsible for keeping their banking data safe, it noted many customers “fail to protect themselves in the simplest of ways.”


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