There is a scary truth about online banking that consumers are quickly becoming aware of — antivirus software is no longer enough to protect them.
Many consumers are outright scared of online banking or to purchase products over the Internet, and for a good reason. Every year, millions of credit cards and identities are stolen directly from personal computers in addition to the billions of dollars stolen by cybercrime professionals. Remember in October 2009 when FBI director Robert Mueller was banned by his wife from doing online banking after he nearly fell for a phishing scam?
Additionally, business members are being impacted by increased cyber fraud. According to David Nelson, an examination specialist with the FDIC Cyber Fraud and Financial Crimes Section, small and midsize businesses and their financial institutions suffered about $120-million in losses due to fraudulent electronic funds transfers in the third quarter of 2009, up from about $85 million in the third quarter of 2007. As a result, 40% of businesses have switched to another financial institution after a fraud incident.
Serious Problem, Serious Solution
This is a serious problem in need of a serious solution, and credit unions have an opportunity to lead the charge in this situation and ensure a safe online experience.
Today more than ever, financial institutions are fighting for market share, and credit unions have an opportunity to gain new members. According to a 2009 report by Raddon Financial Group, 88% of non-customers are unlikely to bank with the big four (Bank of America, Chase, Citibank and Wells Fargo). Additionally, 12% of current customers are "not very likely" or "not at all likely" to remain customers. For institutions competing against the Big Four, 12% represents seven-million households that may be looking for a new financial institution.
By providing a personal credit card reader to members upon opening an issued credit card or account, credit unions can offer consumers a unique and unparalleled safe option to online banking and online shopping. By simply plugging in the device to members' personal computers, members can swipe their credit cards to log-in to their online banking account, or to make purchases just as they would at a store.
As opposed to manually entering the credit card information into the designated fields on the checkout screen, the information is automatically populated with one swipe. The credit card information is safe from the moment members swipe their card because the credit card information is never stored on the member's computer. It is encrypted at the point of the device and then sent to the site. Because they secure sensitive data at the point of origin before it ever reaches the computer, personal credit card readers protect sensitive financial and personal information from endpoint threats such as keylogging, Spyware and Man-in-the-Browser. And better yet, they don't need to play catch-up as new threats emerge: they are secure by design.
Personal Card Readers Critical
Personal credit card readers are critical in today's financial environment because Internet fraud and identity theft is a growing problem all around the world. Consumers need to protect their sensitive information and there is a growing demand to do so. Credit unions can help make that possible, thus giving them a competitive edge and gain new members.
Furthermore, credit unions have an opportunity to build member loyalty and better retain current members. On average, consumers carry five to seven different credit cards, but by offering a card and a device that ensures absolute security, the credit union's card becomes "top of wallet" as members increase the frequency in which they use them. As a result, credit unions can potentially dominate market share.
Antivirus programs provide a valuable function, but they are not able to keep up with the large influx of new and threatening invasions. Every time a new virus, malware program or other security threat is created, it must first be found and de-constructed before a defense can be built. The reality is that new attacks pose a serious threat to users.
By being at the forefront of innovative technology and providing members with personal credit card readers-necessary in today's online world-credit unions have an opportunity to gain new members and retain current ones. Moreover, as identity theft and credit card fraud surge, CUs can be the hero in safeguarding members' personal and financial information.
Daniel McCann is president and founder of NetSecure Technologies, a provider of online transaction security solutions for financial institutions. For info: www.smartswipe.ca/.