Close to 80% of the population uses online banking, so it’s no surprise that threat actors tend to target that sector relentlessly. It has everything they want: data and money. Fortunately, regular people have a lot of tools to defend themselves, their money, and their information from cybercriminals. So, what are the top online banking risks?
Common online banking risks include data breaches, poor encryption, and outdated security measures. Customers can fall for things like phishing scams as well. Following cybersecurity best practices, such as creating strong passwords and avoiding public networks, help mitigate those risks.
Is online banking risky? How can you juggle money and information in a cybersecurity effort to stay safe? Having top-notch security seems difficult, though that’s not the case if you know what to do. Information is key here, so let’s start with the way banks keep you safe.
- How Online Banking Keeps You Safe
- 5 Online Banking Security Risks
- How To Protect Your Online Banking Account
How Online Banking Keeps You Safe
- Alerts. You can ask your banks to send you alerts every time something happens – and we suggest doing that. The bank will let you know when you (or someone else) transfer money from your account and similar things. It’ll also let you know when the bank suffers a data breach, so you can better prepare for the consequences.
- Compliance. The government forces banks to follow certain rules and regulations to ensure citizens are better protected against harm. Noncompliance fines rise to millions of dollars, so most (if not all) banks prefer to follow the law to avoid trouble. That doesn’t mean most banks don’t slip up and fall into noncompliance (whether because of negligence or knowingly), and that’s why certain online banking risks exist.
5 Online Banking Security Risks
1. Data Breaches
Data breaches kept breaking records from 2019 to 2021 – which is not something we should celebrate. We’ve seen close to 2000 data breaches every year lately, so we know things are not looking good for customers of different companies, including banks.
Fortunately, the government demands more from banks (and other companies that handle sensitive data, such as healthcare providers) to protect customer information. Noncompliance is too costly for businesses, so it’s reasonable to expect them to follow these rules.
That doesn’t mean all companies do what they must to protect their customers, so we recommend doing research before opening a new bank account.
2. Poor Encryption
Encryption is mandatory for any website that asks users to register, let alone for banks that ask you for plenty of personal information. Encrypting data alone doesn’t cut it – because not all encryption is equal.
There are better encryption methods than others – and banks should use the best in the business to avoid suffering data breaches (which, as you now know, is a big issue for online banks).
Most banks use 256-bit encryption, which is close to unbreakable by today’s computers. That doesn’t protect you from banks having other poor security measures or you falling for phishing scams, as you’ll see below.
3. Old Security Measures
Banks should be on top of cybersecurity. They should always push the edge and innovate to keep their customers safe, considering they handle both customer information and money. Unfortunately, that’s not always the case.
We won’t go over which banks are better for you for two reasons: first, it escapes the scope of this article; second, we don’t know your risk profile to assess you the right way.
We can recommend doing research before opening a bank account.
In fact, we recommend researching the institution or company you want to do business with, no matter if we’re talking about a bank, healthcare provider, or something else. A simple google research about their data breach history will help a lot.
4. Phishing Scams
Phishing scams are the go-to cyberattack for most threat actors. Sending countless fake emails cost little to nothing, so someone falling for it is a numbers game. We want to help you avoid becoming another phishing scam statistic.
How can you avoid these scams? Don’t open emails from people you don’t know. Never click on any links or download files you haven’t requested. More importantly, don’t reveal personal information or login credentials via email.
The last point is critical: no bank, company, or government institution will ask for any information over email. Banks, for example, will ask you to visit their local branch personally.
5. Fake Sites
Customers should also be wary of fake websites they may stumble upon. It’s easy to fall for this trick because threat actors replicate the original website to the finest detail, fooling customers into writing down their login credentials there – and getting hacked in the process.
How can you visit a fake online banking site? There are three possible scenarios: a phishing scam, stumbling upon it online, and using public networks.
Always open your online bank’s website manually, meaning open your browser and write down the URL yourself. Doing so will help you mitigate the first two scenarios.
The third one is more complicated, though we’ll simplify it: hackers can compromise a public network and will redirect your browser to any site they want if you connect to it. We recommend avoiding public networks (as you’ll see below) for that reason.
How To Protect Your Online Banking Account
Create Strong Passwords
“Password” is the most common password in the world, followed by brilliant cybersecurity password ideas such as “123456” and “123456789.” Does any of those options sound like one you would use? Change it immediately then!
You should always use strong passwords – and even more so if that account is linked to your personal information and money.
So, here’s how you create a strong password: make sure it’s long (at least 12 characters long), mix lower and uppercase letters with numbers and special characters (such as an exclamation point), and never write your password down.
One super-strong password becomes super weak if you reuse it – because you’re always one data leak away from compromising all your accounts that way.
MFA stands for multi-factor authentication, a fancy name for having a website ask for authorization before someone logs into your account.
How does MFA work? You will receive an SMS or email when someone (including you) tries to log into your account using your login credentials. It’s logging in with extra steps, though that extra step prevents hackers from using your account if they have your password.
Imagine you have a super strong password that you reused once – and that second website leaked your password. Enabling MFA will save you from having a hacker access your bank account (and steal your money).
Avoid Public Networks
Wi-Fi is pretty much everywhere. You only have to take a stroll through your neighborhood for your phone to ask you whether you want to connect to this or that Wi-Fi network. The answer should always be “no, thanks.”
That includes your favorite coffee spot’s Wi-Fi network. Connecting to any type of public network to check your bank statements or transfer money is a great way for threat actors to steal your login credentials.
How could that happen? Hackers know how to intercept your data when you share the same network – and online banking is no exception. You should always do sensitive stuff in the privacy of your own network.
Learn About Common Cyberattacks
Threat actors rely on a few options to steal your money and information. We’re talking about phishing scams, malware, and social engineering. Three options and not much else – but that doesn’t mean there aren’t countless variations of those methods.
Let’s take phishing scams as an example. This method is the most commonly used by threat actors. You don’t have to do much research to realize there are thousands of variants – you only have to check your inbox: fake alerts, prizes, rewards, and more. These are all different phishing scams.
Staying up to date with the latest attacks will help you keep your guard up when you receive a suspicious message or face any other cyberattack.
Use Common Sense
The best way to stay protected online is to follow cybersecurity best practices. We have listed a few above: use strong passwords, enable MFA, and so on, though we haven’t talked about the cornerstone of cybersecurity: common sense.
Common sense would lead you to believe winning an iPhone for visiting a website is a scam – but people still fall for that stuff. Common sense would also dictate opening unknown emails or clicking suspicious links is out of the question – but people continue to do so.
Your greatest ally against hackers is common sense, so we suggest listening to it all the time to mitigate online banking risks!
Online banking presents certain risks, such as data breaches and possible phishing scams, though customers can mitigate those dangers by following cybersecurity best practices and demanding banks to do the same. This rather recent way of banking your money is secure, but that doesn’t mean all institutions should be trusted, so research is always due before opening an account.