Online Banking As Popular As Phone Banking Says Report

22.03.2007

Online banking has achieved the same level of popularity among customers as traditional methods such as telephone banking, according to a new report.

The study from Javelin Strategy & Research found that 35 per cent of online customers are likely to use telephone services for their banking requirements.

Procedures such as checking account balances, paying bills and transferring funds that are normal carried out through internet banking were all conducted by customers through automated telephone systems in February.

Javelin states that while internet banking is rising in popularity and consumers are likely to conduct these actions online, telephone banking remains in favour by customers.

However, internet banking remains ahead in terms of the level of security offered to customers for their accounts.

This follows strict regulatory guidelines issued in the US over online banking, which has failed to filter through to telephone banking as yet.

James Van Dyke, founder and president of Javelin, commented: "Javelin data shows that a majority of top 23 US financial institutions need to strengthen authentication methods for the phone, with over one in four still asking for a full social security number and only eight per cent requiring a password or answer to challenge questions."

Mr Van Dyke also warned that new methods of bank fraud, such as vishing, are now becoming more commonplace and are also affecting telephone banking.

Vishing refers to the crime of accessing personal information, like security codes and passwords from the public, through VoIP for financial gain.

Rachel Kim, risk and fraud analyst at Javelin, said: "The face and methods of fraud are constantly evolving and [firms] should always be adapting.

"Now that [firms] have helped increase awareness of phishing, new fraud variations labelled vishing and pretexting rear their ugly head."

The news comes as institutions such as the Union Bank of California have started to tighten their online banking security.

In a move reflecting growing awareness of internet fraud, the bank has said that it has installed new technology barring unauthorised users from accessing account information.

The bank has put in a two-step log-in process, prompting users to provide responses to several security questions.

Terry Kelly, senior vice president in e-commerce, said: "Giving our customers increased peace of mind that their online services are not only efficient, but also provide them with the best possible protection from the latest fraud risks in always top of mind when we develop new online functionalities."