Internet Banking Systems

Internet Banking Systems Saeed-ur-Rehman Sheharyar Naeem Introduction to Online Banking Access account information, review bills, 1. 2. 3. 4. pay bills, transfer funds Apply for credit, mortgage or auto loans Find out if a check has cleared Compare rates and prices 24 hour access to your bank accounts Benefits of Online Banking For Banks: 1. Cuts payroll costs 2. Extends to new markets 3. Flexibility 4. Image of Company For Consumers: 1. Saves time/Money 2. Flexible 3. Can log on from almost anywhere 4. Convenient 5. Transaction Speed Disadvantages of Online Banking • Building trust with consumers to use online banking • Laws and software issues to support online banking to ensure accountability • Security • Learning Curve • Bank Mergers • Site Changes Internet Banking Technology Developments • Advances in communications provide networked global access to information and delivery of products/services – Internet has reached critical mass (60% of U.S. households) – Some banks have 25 percent of customers banking online • Increased competition from other industries and abroad • Greater reliance on third party providers • Advances in technology make the component functions of banking more easily divisible Internet Banking Products & Services – – – – – – – – – – – – – Transaction information Funds transfer Cash Management Bill payment Bill presentment Loan applications Stored Value Aggregation Electronic Finder Internet Payments Wireless Banking Certification Authority Data Storage Challenges • Security • Systems Development and Management • Performance • Return on investment Major Factors of Security Program • Reviewing physical and logical security: – Review intrusion detection and response capabilities to ensure that intrusions will be detected and controlled – Seek necessary expertise and training, as needed, to protect physical locations and networks from unauthorized access – Maintain knowledge of current threats facing the bank and the vulnerabilities to systems – Assess firewalls and intrusion detection programs at both primary and back-up sites to make sure they are maintained at current industry best practice levels Authentication • Reliable customer authentication is imperative for Ebanking • Effective authentication can help banks reduce fraud, reputation risk, disclosure of customer information, and promote the legal enforceability of their electronic agreements • Methods to authenticate customers: – Passwords & PINS – Digital certificates & PKI – Physical devices such as tokens – Biometric identifiers Internet Banking Crime • Internet banking and payment systems may allow for new ways to conduct illegal and fraudulent activities – Unauthorized access to deny service or redirect a website – Identity theft resulting in unauthorized or illegal use of account information – Money laundering – Phony Internet banks International E-Banking • Information revolution around the globe and borderless reach of the Internet • Increase in global partnerships/alliances • Risks to U.S banks from cross border E-banking without adequate due diligence – Unlicensed activities? – Understanding application of local prudential and customer protection laws & regulations? – Expertise? • Risks to U.S. consumers of dealing with foreign Internet banks Key Findings of Successful E-banking Exams • • • • • • • • Active vendor management Ongoing board involvement Sufficient technical expertise Proactive network security that effectively prevents, detects, and responds to intrusions Strong authentication practices Encrypted communications Periodic compliance and legal reviews Appropriate backup and recovery Risks Supervision Program • Guidance -- Focus on risk analysis, measurement, controls, and monitoring • Risk-based examinations of banks and third party service providers (as authorized by the Bank Service Company Act of 1962) – On site and Quarterly reviews – Focus on safety and soundness – Reviews of banks with transactional web sites and E-banking service providers • Training and Technology Integration Project • External outreach and co-ordination • Licensing process for Internet-primary banks and novel activities Summary Safety, Soundness and Responsibility will remain the primary driver Summary DO:  Make sure that you are on the correct website  Make sure that you choose a password that will not easily be decoded  Check monthly checking and credit card statements carefully each month  Report errors or problems promptly  Be sure to “Log Out” of website when finished Summary DO NOT  Disclose personal information such as credit card or social security numbers unless you are 100% sure who you are dealing with  Have other browsers open while you are banking online  Download or open files that were sent from strangers because this could infect your computer and capture sensitive information without you even knowing. QUESTIONS!!!!!!! References • http://www.occ.treas.gov/netbank • http://student.vwc.edu/