Financial Conduct Authority outlines mobile banking risks

Fraud, malware and money-laundering are among the risks associated with mobile banking, according by a new report by the Financial Conduct Authority.

The FCA, the UK regulator that was set up to replace the Financial Services Authority last year, has been investigating the potential dangers associated with mobile payments and other smartphone-based banking services.

In an interim report published today, it identified the main potential risks to banks and their customers. These risks do not necessarily affect mobile banking users today, but may do as the technology finds wider adoption. 

They are as follows: 

Fraud: Mobile banking may present new ways to defraud customers that are distinct from Internet banking fraud

Security: Fake mobile banking apps could be especially damaging to customers, while mobile viruses that intercept banking data are an emerging issue

Money laundering: Mobile banking services, especially those that are not linked to the customer's bank account, could be used to launder money, and make it hard for banks to identify suspicious transactions

Third party risk: Banks are increasingly including third parties in their mobile banking infrastructure, potentially increasing the risk of technical issues and accountability disputes

Consumer awareness: As an emerging technology, mobile banking may confuse consumers and they may make accidental transactions

Technology risk: Mobile banking services rely on complex IT infrastructure. As customers grow to rely on those services, disruption to that infrastructure could be extremely damaging

Having identified the key challenges, the FCA is now in the process of ensuring that banks are taking appropriate precautions to mitigate them. It will scrutinise their mobile strategies, their mobile software development practices, and the information they provide mobile banking customers. 

According to a survey cited in the FCA report, one in five UK adults has used their mobile phone to conduct a financial transaction, and a quarter have checked their bank balance via mobile. 

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media (now Bonhill Group plc) from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The...

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