Financial Conduct Authority Warns Of mBanking Risks

Mobile banking has seen its fair share of technical glitches in the past. However, customers should also be aware of human errors that many of us are prone to make when engaging in mobile banking.

Bank customers are increasingly engaging in mobile banking, as it is a feature that allows them to freely conduct financial transactions from the palms of their hands. According to the BBC News, a new report from the UK’s Financial Conduct Authority (FCA) warns consumers about the risks of mobile banking, claiming that trivial mistakes can cause major problems and lead to financial fraud. Banks are educating customers on the benefits of mobile banking, but users should be equally aware of its perils.

The FCA is in the midst of investigating the mobile banking sector and is studying various mobile payment providers, firms using mobile phones, tablets, computers and other handheld devices, reported the BBC News. Mobile banking allows users to check account balances, transfer funds and engage in other financial activities on their phones through a mobile application. The FCA reported that nearly one-in-five UK adult customers have used their mobile banking accounts to complete a payment, and one-in-four have used it to check their account balance.

Upon reviewing the market, the FCA revealed potential customer risks when mobile banking. The association warned that users must be careful when they enter personal details, and they should make sure they are entering correct data. People frequently make mistakes when entering information via keypads, and regulators said the smaller the keypads, the higher the risk of entering incorrect details such as the amount of funds transferred.

The financial watchdog revealed that it is exploring other risks for both consumers and suppliers, and is focusing closely on fraudulent activity, namely accessing accounts, malware threats, technology failure, money laundering systems, service interruptions and more.

“We want to make sure that the industry knows exactly what we’re looking into,” explained Clive Adamson, director of supervision at the FCA. “Consumers will have a clearer idea of some of the potential risks.”

The FCA announced it will continue its investigation and is planning to run a more detailed assessment towards the end of 2013. The organization will review and test sample firms that offer mobile banking to its customers. According to Finextra, a complete review is set to be published and released by the beginning of 2014.

Adamson 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.”

To read the full story at Finextra or BBC News click here.