Saturday, September 12, 2009

Online Banking Security - Layers of Protection

No one can blame you for being wary and mistrustful. After all, it is your money we are talking about. We have heard of rumors and stories on TV about e-thieves stealing important information like as credit card numbers. The truth is, online banking is just as secure as your average person-to-person banking and is more secure than the media usually makes it out to be. In fact, online banking may be safer than traditional banking.

Traditional Banking vs. Online Banking

You may not have realized it but in traditional banking, you are exposed to several security threats. Your mail containing your bills and bank statements can be intercepted. When you use the ATM, you may be exposed to physical theft or information theft. Your information can also be accessed by bank employees. Above all, when you pay your bills with a check, your account number, social security number and even your phone number are usually printed on the paper check.

These threats can be avoided, if not completely eliminated, with online banking. Financial transactions are made in the comfort and security of your home or office. Moreover, because they know that online customers are apprehensive, security is their top concern. The bank's computers are also protected by a firewall.

Online Banking Security Measures

Although single password protection is the most common security method in the United States, password authentication alone is not secure enough for the type of information and business with Internet banking. That's why online banks use a far more complicated system to protect their clients and ultimately, themselves. They employ numerous layers of strategies and measures to ensure their customers of the security of their dealings. These strategies vary according to the choice of the bank. However, there are measures that are commonly employed by many online banks. Here are some of them.

· The https Protocol: Https is a URI (Uniform Resource Identifier) scheme that is used to identify a secure HTTP connection. Online banking ports are secure sites, often using this prescript, which is encrypted. If something is encrypted, it means that the data, usually in plain text, is converted into codes. Encryption is an excellent process of preventing hackers from accessing personal information in a home or office computer through intercepting "keylogging" or "keystroke logging," the process of keying in passwords on a website.

· TANs: Most online banks take customer's security to another level with transaction numbers, or TANS. This method is the most popular among online banks. These TANs are passwords that are intended for a single session only. Prominent banks using this strategy include the Deutsche Bank, the Philippine National Bank, and the Asian Development Bank (ADB).

· Security Tokens: Some banks issue security tokens to the customers. These tokens dynamically change the numbers customers need to enter for each transaction. Online banks using this method include the Bank of Ireland, the Commonwealth Bank of Australia, the National Bank of Dubai, the Bank of Queensland and the Montgomery Bank.

· IC Cards (Integrated Circuit Cards): Also known as chip cards or smart cards, IC cards are another method popular among online banks throughout the world. Chip cards are unique to each customer. They provide an easy means to conduct business transactions in a standard, secure manner with minimal human intervention. Usually, Chip cards contain encrypted digital certificates along with other important information about the holder. Combined with biometrics, chip cards provide an authentication system with two to three factors. The Industrial and Commercial Bank of China (ICBC), the Hong Kong and Shanghai Banking Corporation (HSBC), the Qatar National Bank, the Royal Bank of Canada (RBC), the Standard Bank, and the Barclays Bank use the chip card system.

· Digital Certificates: Another method of ensuring online banking security is with digital certificates. These virtual certificates allow you to digitally authenticate your transactions by connecting them to a physical device such as a personal computer and a mobile phone. Digital certificates are being used in many giant banking corporations such as the Barclays, HSBC, the China Merchants Bank, the Bank of Montreal, the Bank of the West and many others.

Online banks or Internet banks have their security policies and procedures posted on their sites prominently. You can browse through them before choosing which bank to trust. If you have further questions about their methods, send them a message and they will respond to it appropriately.

By Alyssa Medrano
Want to read more of this article? You can read more tips on Online Banking Security, plus other Online Banking Tips only at

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