NEW YORK, Oct. 7 /PRNewswire/ -- Mobile banking from a personal BlackBerry or iPhone poses new threats to financial institutions as criminals seek to hide their fraud or money laundering crimes behind the relative anonymity of handheld devices.
"Rapid changes in the payments industry - moving from cash and checks to electronic payments and now to mobile banking - not only provide increased convenience and value for consumers but also present new elements of risk and fraud," says Steve Solberg, Senior Product Manager for Fraud at Fortent, the risk and compliance specialist.
The mobile banking channel is projected to explode in the next five years, from 1.1 million U.S. customers in 2007 to 42.3 million in 2012, according to TowerGroup. Mobile initiatives have been even quicker to take off in other countries, such as South Korea, Hong Kong, and Brazil, with companies starting to offer everything from payments to stock trading through mobile devices.
"Banks want to be able to attract and retain the customers demanding this channel," says Mr. Solberg, "but they need to have the safeguards in place to ward off criminals trying to creep into the system. The real risk for banks is that we don't know exactly the extent to which financial criminals are going to exploit mobile banking. There isn't a track record of realized risk."
The Growing Threat
"Mobile banking is still in its infancy. While there haven't been major incidents yet of huge losses from the mobile banking channel, banks are gearing up to protect themselves and their customers."
"The potentially devastating results of a major fraud loss make it incumbent on banks to prepare adequately against any new threat," says Mr. Solberg.
A 2007 Federal Reserve Payments Study reported that since 2003 the number of electronic payments in the United States has increased at an annual rate of 12.4%, while the number of paper checks paid is decreasing at an annual rate of 6.4%. Mobile banking, along with debit and credit cards, wires, and online bill payments, present some of the greatest emerging electronic payment threats to banks.
Who Are the Criminals?
"The faceless nature of mobile banking makes it attractive for a certain type of criminal - primarily organized crime. These crime groups have a lot of money and can employ financially and technologically sophisticated people, including scientists from former Soviet bloc countries," says Mr. Solberg.
Banks Have Been Here Before
While mobile banking presents a unique set of challenges due to security issues surrounding these devices (which often lack the security of PCs), "banks have faced this kind of challenge before," he explains.
"When institutions began to offer online banking, for example, there was a similar urgency to protect that channel, and banks have become very sophisticated with their online controls and monitoring."
Controls Necessary to Contain Risk
"Banks realize that mobile banking is inevitable, and are eager to capitalize on its growth," Mr. Solberg says. "But with this new channel, banks must also shore up their defenses with appropriate technological and program controls to make sure they can offer these services effectively and safely."
About Fortent
Fortent provides risk and compliance solutions to financial institutions, government agencies, and individuals in more than 100 countries. It has relationships with more than 400 institutional clients, including 26 of the world's 30 largest financial firms, which use Fortent technology in over 50,000 locations worldwide.
Fortent combines award-winning technology innovation and expertise in regulatory risk to help financial institutions improve productivity and protect hundreds of millions of accounts from financial crimes, including money laundering, terrorist financing, and fraud. Endorsed by the American Bankers Association, Fortent's advanced systems deliver the most efficient and effective anti-money laundering, know your customer, and fraud detection available on the market today. Technology clients include The Bank of New York Mellon, Bank of Tokyo Mitsubishi-UFJ, Barclays, JPMorgan Chase, Justice Federal Credit Union (U.S. Department of Justice), Lloyds TSB, The Royal Bank of Scotland, Scotiabank, and UBS.
Through its information and training businesses, Fortent delivers the world's leading sources of regulatory news, analysis, and guidance. Moneylaundering.com (and, in Spanish, lavadodinero.com) is the top-ranked site for money laundering news across the globe, while Fortent Inform serves as a groundbreaking regulatory information management tool for institutions in the U.S. In addition to producing the world's largest money laundering conference and exhibition, Fortent offers the industry's leading professional certification program, career planning tools, web seminars, and conferences in the U.S., Europe, Latin America, and the Middle East.
Fortent's global team operates from key offices in New York, Miami, Atlanta, London, and Tokyo. For further information, visit http://www.fortent.com.
If you would like to speak with Mr. Solberg, please contact Suzanne Oaks, Rimjhim Dey, or Trang Mar of Temin and Company at 212-588-8788 or news@teminandco.com.
CONTACT: Suzanne Oaks, Rimjhim Dey, or Trang Mar of Temin and Company at 212-588-8788, or news@teminandco.com, for Fortent.
SOURCE Fortent
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