South African banks try to avoid creating the perception that digital banking delivery channels are riskier, because that, on its own, is a huge risk. The image portrayed to customers by the banks is that these delivery channels are credible. Be that as it may, clients are made aware of the factors that enable fraud and this creates awareness of fraud delicacy. Notwithstanding, some customers tend to become concerned about security issues, especially when it comes to the digital banking delivery channels.
However, as time goes on, users become comfortable with the delivery channel; although initially, when Internet banking was launched, people said they would never bank on the Internet. The Internet was perceived as one of the most dangerous places. As the delivery channels mature, users become comfortable - thus security concerns have very little impact on the adoption of digital banking delivery channels.
Officials in the banking industry were at pains to explain that customers in SA, especially the 'middle and upper classes', would prefer to conduct banking transactions using the Internet and mobile devices, rather than frequenting ATMs.
Crime busters
South African banks have dedicated teams of information security specialists who 'combat' cyber crimes. Seeing that customers are concerned with digital banking crime, banks are reacting to crime forcefully and with a lot of sophistication to avert losses, especially of assets and reputation.
Among other measures, phishing and spoofing Web sites are removed and suspicious e-mails are blocked before they reach the customer. South African banks are also available 24 hours a day to assist their customers in cases where they suspect they are being defrauded online.
Banks are making positive progress when it comes to thwarting the SIM swap crime. They are working with the mobile telecommunications network operators to eliminate this crime.
The banks also ensure Internet banking transactions are taking place in a secure, encrypted environment. It is impossible for the criminals to intercept these kinds of transactions because of encryption. The signature at the end of the encryption is done by a certificate imbedded in the systems at the bank. So, whenever customers see the lock in their Web browsers, they know they are on the genuine banking Web site. Other than the lock, users can look at the URL.
Strange solutions
Some of the methods employed by the banks to combat e-crimes are unconventional. These include banks hiring their own hackers and bombing their own ATMs (as part of research). Working closely with the law enforcement agencies and the South African Banking Risk Information Centre, banks have managed to bring down the level of ATM bombings. The South African Police Service's National Intervention Unit has been at the forefront of curbing ATM bombings. This has been achieved by arresting and/or using deadly force to stop the criminals responsible for this type of crime.
The South African Police Service's National Intervention Unit has been at the forefront of curbing ATM bombings.
Absa was the first bank in the world to craft another interesting method to curb digital banking crimes, especially ATM skimming and bombings. This method involves the squirting of pepper spray in the face of the criminal while he is busy fiddling with an ATM. The eye-watering chemical will make the criminal lose balance at the ATM, and be unable to commit the crime. The technology employed uses cameras to identify criminals fiddling with the ATM, and another device which then ejects pepper on the perpetrator's face, while the police respondents drive to the scene.
Every technology, however, has its disadvantages. In July 2009, the machine mistakenly squirted pepper into the faces of genuine technicians, and they had to get treatment from the paramedics.
At the time of finalising the study on which this Industry Insight is based, Absa's deployment of this method was still in the pilot stage. If the pilot yields positive results, the bank will roll-out the necessary technology nationwide, and other banks are watching. South African banks are working tirelessly to be one step ahead of the highly sophisticated criminals.
#Dagada investigated digital banking security as part of his PhD study at the University of South Africa. Banks that participated in this study include Absa, FNB, Investec, Nedbank and Standard Bank.
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