Online banking has become increasingly popular in recent years, and the COVID-19 pandemic has only helped to escalate that trend.
A 2020 survey found that 91% of consumers had banked virtually during July alone. The most common online banking activities were checking account balances and depositing checks. Roughly half of the people had visited their bank’s physical branch less often during the pandemic. About 40% were using their bank’s mobile app more often than before the coronavirus outbreak.
As online banking becomes more prevalent, consumers may find themselves asking this one fundamental question: Is it really safe?
Is Online Banking Safe?
The good news is that overall, online banking is safe for consumers. First, financial institutions take serious measures to protect their customers’ identities, personal information and money. And while the data breaches making the news might give the impression that your money isn’t safe, there’s little chance of a criminal being able to hack your bank’s website and steal your money.
In addition to the security measures that banks have in place, there are also safety measures to ensure that if you do lose money, you’ll be made whole. First, credit card companies have a practice of refunding consumers for fraudulent charges made on credit cards. Additionally, FDIC insurance is in place to protect consumers from financial loss if something happens to their bank.
That being said, consumers should not passively assume their money and personal information are safe. Instead, it’s important to be aware of some of the risks that come with online banking and take steps to reduce them.
Online Banking Risks
Keylogging is a method of hacking where someone records your online keystrokes and uses them to log into websites you’ve previously accessed, including your bank account. It’s especially easy for hackers to do on public networks, such as public wifi channels.
Phishing is when scammers trick consumers into sharing sensitive information such as passwords, account numbers and Social Security numbers. Often, the scammers send an email with a link to a fake website designed to resemble the individual’s banking website. When you click the link and log into the website, the scammer gets your login information. According to the FBI’s 2019 Internet Crime Report, more than $57 million are lost each year in phishing scams.
Identity theft is one of the most common ways for criminals to gain access to your finances. When someone steals your identity, they gain personal information that allows them to access your current accounts and open new ones using your Social Security number. More than $160 million are lost each year due to identity theft. Identify theft often occurs as a result of data breaches. Well-known data breaches include those that occurred through Experian, Marriott and Target.
Online Banking Safety Tips
Use Strong Passwords and Change Them Regularly
One of the simplest and most overlooked things you can do to secure your online banking information is to set secure passwords and change them regularly.
Using personal information in your password increases the likelihood of someone being able to guess it. Instead, random combinations of numbers, letters and characters are the most secure.
Additionally, changing your passwords every few months will help secure your account even more.
Enable Two-Factor Authentication
Two-factor authentication is an added layer of security where your bank sends you a unique code, often via text or email, for you to enter to access your account. This security measure ensures that even if someone does get ahold of your password, they won’t be able to access your account.
Avoid Public Wifi
Using a public wifi network opens you and your private data up to hacking. Not only can malicious wifi networks be set up solely to steal your data, but because public wifi networks aren’t encrypted, they make it easy for hackers to access your private information. If you find yourself in a situation where you must use public wifi, avoid logging into your banking apps or websites.
Set Up Text Alerts
Most banks allow you to set up alerts where you receive a text message anytime someone makes a purchase with your account. As a result, you can find out immediately if someone has gained access to your account, allowing you to shut off your cards and change your passwords quickly. Credit card companies allow customers to dispute fraudulent activity, but you can’t dispute it if you aren’t aware it’s even happening.
Sign Up for Identity Theft Protection
There are plenty of services designed to monitor your credit and financial activity to spot any signs of identity theft. When you use identity theft protection, you’ll be alerted immediately if there are any signs that someone has stolen your identity.
Use Your Bank’s App
Banks take extra security measures to make sure their apps are as secure as possible, but they may not be able to take the same precautions when you access their websites via a browser. As a result, using your bank’s official mobile app will be safer than visiting the website in a web browser.
Confirm the Legitimacy and Security of Your Bank
With the increase in the number of online banks, it’s more important than ever to confirm the legitimacy of a financial institution before signing up. You can verify a bank’s legitimacy by searching for it in the Federal Deposit Insurance Corporation database. If a bank isn’t FDIC insured, avoid putting your money there.
Additionally, pay attention to what security measure your bank takes on its website and mobile app to make it difficult for others to access your account.
Look Out for Phishing Scams
Never access your bank’s website via a link in an email. Doing so could make you vulnerable to phishing scams. Instead, always type your bank’s URL directly into the web browser to ensure you’re accessing the legitimate website. Be sure to look out for the padlock sign next to a website’s URL in the address bar. Easily tap it to check if a website’s connection is encrypted.
Use a VPN
A virtual private network is a way of creating a secure internet connection by hiding your IP address and physical location while encrypting your internet connection. When you use a VPN, you’re protecting your browsing habits and online information, ensuring that hackers can’t access the apps and websites you’ve visited.
The Bottom Line
We live in a digital age, and online banking is becoming increasingly common — and necessary. While accessing such sensitive information online might seem risky, there are plenty of security measures preventing nefarious individuals from accessing your information. Not only do banks take security measures to keep your money safe, but there are plenty of steps you can take on your own to ensure the security of your accounts.