Online banking security: How to keep your information safe

Yaron Dror

February 12, 2024

  • # Fraud Prevention
  • # Account Protection
  • # Payment Protection

Online banking offers a convenient way to access your account information and manage your finances right from your computer, phone, or tablet. But with that convenience comes some security risks.

If you aren’t mindful of your online banking security, you could fall victim to different cyber threats. Here’s what you need to know to protect your financial information and ward off cyber attacks when you use online banking.

What is online banking, and how does it work?

Online banking (also known as virtual, digital, or internet banking) refers to completing financial transactions electronically through a bank's website or mobile app. Here are a few examples:

  • Accessing bank accounts: Customers can view their savings and checking account activity, review balances and debit card purchases, and monitor recent transactions from anywhere, at any time.

  • Transferring money: This includes moving money between accounts, paying bills, and setting up automatic payments.

  • Managing personal finance: Online banking typically offers tools to help with budgeting, tracking expenses, and planning financial goals.

This technology eliminates the hassle of always having to visit a bank in person for transactions and lets customers do their banking whenever it suits them — even beyond regular bank hours.  

Is online banking safe?

If you feel hesitant to use digital banking or wonder if online banks are safe, it’s always good to proceed with caution. Despite significant advancements in banking technology, cyber attacks remain a risk in online banking. Threats like hackers exploiting system vulnerabilities or phishers looking to steal your data are part of the ongoing challenge.

Maintaining your account safety hinges on understanding how these threats originate. Here's a closer look at the common cyber risks:

  1. Phishing scams: With phishing, cyber criminals will send fake emails or texts pretending to be your financial institution, sharing links that lead to fake banking websites. The goal is to get you to enter your login credentials on the fake site so they can steal your information and gain access to your account.

  2. Malware attacks: These attacks can happen if users accidentally download malicious software, known as malware, which compromises your device's security. This can occur if you click on a link or download an attachment in a scam email. Once you inadvertently download the malware on your device, hackers can use it to spy on your activities and collect sensitive data, such as passwords and debit and credit card numbers.

  3. Identity theft: Scammers employ different methods, including manipulative tactics that exploit victims' emotions and trust (known as social engineering), to acquire personal information. They’ll then use this stolen information to fraudulently gain access to your financial accounts or open accounts in your name.

  4. Man-in-the-middle attacks: If you use an open Wi-Fi network, like those in public cafes or libraries, hackers can access the network to intercept and gather any data you transmit on your device. If they collect your login details, they could compromise your account.

By recognizing these threats, users can take proactive steps, like avoiding public Wi-Fi for banking transactions and reporting unsolicited banking communications as spam, to better protect their bank accounts and financial data.

What measures do online banks take to protect customers?

To keep customers’ personal information and money safe, online banks incorporate several key security measures:

  • Encryption: This technology secures information by converting it into a code that only authorized parties can understand, like you or your bank. It safeguards the communication between a user's device and the bank's servers, making it extremely difficult for hackers to intercept and decipher sensitive information.

  • Continuous fraud monitoring: Banks use sophisticated systems like artificial intelligence to monitor online account activities and identify unusual or suspicious transactions. These systems alert the bank and the customer through preferred methods such as email or text messages, enabling quick action against potential fraud

  • Multifactor step-up authentication: Multifactor authentication (MFA) methods, like two-factor authentication (2FA), require users to provide two or more verification forms before accessing their online account. For example, after entering a password, users might also need to input a code sent to their mobile phone via SMS or verify their identity through a face scan. To “step up” the security, the user may also need to reauthenticate before performing any high-risk activities, like transferring a large sum of money. These added authentication layers lower the risk of unauthorized access and fraudulent activity.

  • Regular updates and patches: Keeping software up to date is vital in the fight against cyber threats. Hackers can target gaps in software security to infiltrate systems and gain access to banking information. Banks regularly update their systems with the latest software and encourage users to do the same with their devices and mobile banking apps.

  • Federal Deposit Insurance Corporation (FDIC): Most reputable online banks have FDIC insurance, which protects depositors' funds up to a specific limit in case of any breach that results in lost money, adding an extra layer of financial security.

Through these comprehensive measures, banks strive to create a secure environment. This allows customers to manage their finances more confidently while maintaining their online security.

Tips for a secure online banking experience

Ultimately, users play a major role in maintaining their own security. Creating strong, unique passwords, staying alert to phishing attempts, and regularly updating devices and mobile banking apps with the latest software patches can go a long way toward avoiding cyber risks.

Here are some tips to enhance your online banking security and safeguard your personal information:

  • Use strong passwords: Create complex and unique passwords for each online banking account. Avoid common phrases, and include a mix of letters, numbers, and symbols.

  • Enable authentication methods: Use MFA or 2FA to further protect your account. This way, if someone tries to use your password, they'll also need to pass a second security step, like entering a code from your phone or a fingerprint scan. If you like the convenience of SMS-based 2FA, you may still want to add another layer of protection that isn’t tied to your phone number, like biometric protection from IronVest. This option can better protect your logins in the event you lose your phone or someone steals it. 

  • Regularly monitor account activity: Monitoring your bank account and credit union transactions will help you stay alert to any suspicious activity and report it as soon as possible.

  • Update banking apps and devices: Regularly update your mobile banking apps and devices to ensure you have the latest security features.

  • Be wary of public Wi-Fi: If you connect to public Wi-Fi, be mindful of what information you view. Avoid accessing your banking information or completing any transactions on these networks to hide your data from hackers and maintain your digital privacy.

  • Use a bank-grade password manager or security app: A password manager is a handy tool that generates unique, complex passwords and securely stores them, so you don't have to remember each one or resort to using simpler credentials that hackers can easily crack. To take your bank account security a step further, go beyond a simple password manager and use a password security app like IronVest that’s specifically designed to protect your most sensitive accounts. 

  • Educate yourself on phishing scams: Be aware of common phishing tactics, and never click on suspicious links or share personal information via unverified communications.

Secure your online banking: Discover IronVest's advanced cyber-protection

While banking online offers customers accessibility and convenience, it also demands heightened vigilance against ever-evolving cyber threats.

For a safer digital experience, consider using IronVest to protect your bank accounts. Its advanced biometric authentication and account access protection technologies offer a multi-layered approach to digital security. Banks looking to prevent fraud and reduce step-up authentication friction for customers can also tap into the wealth of tools and resources IronVest has to offer. Get IronVest today to improve your banking experience and ensure your most sensitive information remains secure.

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