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Financial services watchdog warns mobile banking needs to be tested

Aug 30, 2013 Sean Albert

Mobile banking is posing a number of threats to consumers and financial institutions, including the potential for identity theft and data breaches.

In an interim report, The Financial Conduct Authority backs up this assertion. However, it goes further to identify a few threats many individuals and firms that use the technology may not have taken into consideration - IT failures, disruptions or outages, Computer Weekly reported.

One of the greatest risks consumers can face in safeguarding their data comes from financial services providers failing to test the robustness of their IT storage and security systems against transnational threats, according to the news source.

"The potential impact of this may grow as consumers increasingly rely on mobile banking," the interim report stated. "We recognize that firms may be under strong commercial pressure to develop and launch products quickly, which could risk services being released without sufficient testing and protection."

Additionally, malware is an increasingly pressing problem for financial institutions that offer mobile banking to consumers, especially those who are Android users. Malware can be communicated via SMS messages to access bank accounts numbers, passwords and login information. This can ultimately result in financial loss and a reduction in consumer trust

A recent study from the U.S. Department of Homeland Security deemed Android devices to be "malware magnets." In fact, in 2012, 79 percent of malware threats targeted Android mobile operating systems. However, considering that the majority of operating systems in use around the world are supported by Android, these facts - while ostensibly accurate - may present a misleading idea of Android devices' relative security, particularly in comparison to Apple devices.

To best prevent breaches, financial institutions will want to regularly test their systems to ensure customers and information are adequately protected.