Bank description
Online banking (or Internet
banking) is a term used for performing transactions,
payments etc. over the Internet through a bank, credit
union or building society's secure website. This allows
customers to do their banking outside of bank hours and
from anywhere where Internet access is available. In
most cases a web browser such as Internet Explorer or
Mozilla Firefox is utilized and any normal Internet
connection is suitable. No special software or hardware
is usually needed.
Online banking usually offers such features as:
bank statements, with the possibility to import data in
a personal finance program such as Quicken or Microsoft
Money
electronic bill payment
funds transfer between a customer's own checking and
savings accounts, or to another customer's account
investment purchase or sale
loan applications and transactions, such as repayments
account aggregation to allow the customers to monitor
all of their accounts in one place whether they are with
their main bank or with other institutions.
There is a growing number of banks that operate
exclusively online. Because these online banks have low
costs compared to traditional banks they can offer high
interest rates.
Security
Protection through single password authentication, as is
the case in most secure Internet shopping sites, is not
considered secure enough for personal online banking
applications in some countries. Online banking user
interfaces are secure sites (generally employing the
https protocol) and traffic of all information -
including the password - is encrypted, making it next to
impossible for a third party to obtain or modify
information after it is sent. However, encryption alone
does not rule out the possibility of hackers gaining
access to vulnerable home PCs and intercepting the
password as it is typed in (keylogging). There is also
the danger of password cracking and physical theft of
passwords written down by careless users.
Many online banking services therefore impose a second
layer of security. Strategies vary, but a common method
is the use of transaction numbers, or TANs, which are
essentially single use passwords. Another strategy is
the use of two passwords, only random parts of which are
entered at the start of every online banking session.
This is however slightly less secure than the TAN
alternative and more inconvenient for the user. A third
option, used in many European countries and currently
being trialled in the UK is providing customers with
security token devices capable of generating single use
passwords unique to the customer's token (this is called
two-factor authentication or 2FA). Another option is
using digital certificates, which digitally sign or
authenticate the transactions, by linking them to the
physical device (e.g. computer, mobile phone, etc).
While most online banking in the United States still
uses single password protection, the FDIC has issued
regulations requiring that banks implement more secure
authentication mechanisms by the end of the year 2006.
Banks in many European countries (including the
Scandinavian countries, The Netherlands, Austria and
Belgium) are offering online banking for e-commerce
payments directly from customer to merchants. |
