Banking Security: The Threats of Modern Banking

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Threats of modern banking


The banking industry has always been a target for attack by ill-intentioned people wanting to make a quick buck. This has been true ever since there were banks and thieves, who’d simply walk in armed to the teeth, demand the tellers bring them the dough, and make their getaway. And while that still remains the case–in theory, the avenues through which crooked individuals can access others’ financial resources have multiplied.

In this article we outline some of the hazards associated with banking security in the digital age so that you can use that knowledge to avoid being a victim.

Banking security: Times have changed

In olden days, the only way to transfer funds to and from the bank was to physically visit the bank carrying a sack full of money. This held its own set of dangers, like being mugged on the way (if you’re depositing) or after your visit (if you’re withdrawing).

Modern times have given us many more methods to transfer funds, starting from wire transfers and ending with internet banking. These new methods improved banking security by mitigating the dangers of being physically mugged while carrying your cash, but they’ve opened up ways for inventive evil-doers to attempt to steal your savings.

The dangers of banking in the digital age

digital banking security

Here’s something you already know: the internet is full of hackers. Accessing your bank account or transferring funds or financial information over the internet carries the risk of being encroached upon by hackers. Financial institutions are targets of digital malice due to their constant connectivity and the potential gain that can be gleaned by their penetration.

Hackers who gain access to your bank account login credentials or your credit card data can make unauthorized withdrawals or purchases from your account.

Identity theft

Defined as individuals stealing and using your personal information for their own gain. The information stolen could be your name, birth certificate, government ID number, social security number, medical insurance information, financial account information, etc. These can be obtained in a number of ways and have been used to compromise banking security and extract benefits from victims on the order of millions of dollars a year.

The methods through which your account can be compromised include:

identity theft

1.     Phishing

Far from being a leisure activity, this involves creating an email that poses as a legitimate communication from your bank or any other official institution. When you receive this communication you are directed to enter some of your personal information and send it to the attackers. A large percentage of the financial sector is the target of phishing frauds.

2.     Pharming

This involves creating a spoof website and redirecting your traffic from the original site to the counterfeit. This can be done by corrupting the hosts data on the user’s computer or attacking the DNS servers for the website, so that–even if the user enters the correct URL–they are diverted to the fraudulent website.

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3.     Vishing

The same concept of phishing but relies on a phone call conducted over the internet (VoIP). The caller pretends to be representing your financial institution, and asks you to submit personal details that they can exploit. The call is programmed so that it can even trick your caller ID to show a legitimate number.

4.     Nigerian scams

One of the most famous scams out there, this is usually conducted by email. The scammer will tell you a fake story about how they are a high-standing official or royal descendant in an African country, and that they need a bank account to extract their money from the bad guys in their country, promising you a percentage.

They obtain your bank information and start asking for small payments to verify the viability of the account. Depending on your cooperation, they either take that first payment and disappear, or keep asking for more, justifying them with parts of the story.

ATM threats

ATM security

One of the advance methods to compromise banking security. This is the closest thing we have to people robbing a bank or mugging a customer is ATM theft. But rather than trying to take the money after you extract it, there are far more insidious ways that thieves make plays for your money.

A note about cards

Credit cards in the past worked by encoding your data in a magnetic strip, the black bar you can still find on the back of your card. Nowadays; however, cards usually encode most of your data on a small chip that looks like a SIM card on the front of the card, which is called an EMV chip and provides higher banking security for the card.

Skimmers

You may have seen warnings circulating about something called an ATM skimmer, little devices that fit over the card slot and steal your card data as you insert it into the machine. Well, they are true and ATM skimmers are definitely a threat. They not only can be fitted onto ATMs, they can also be used on the credit card point-of-sale devices found at many retail stores.

Cameras and fake keypads

In order to obtain the PIN code of the card, scammers will place cameras on or around the ATM to record you while you enter it on the keypad. An even more devious method consists of installing a fake keypad on top of the ATM’s so that it records your key presses.

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Shimmers

As technology advanced, thieves no longer needed large, bulky ATM skimmers. They could instead install a small chip inside the ATM card slot, which could perform the same function. And while skimmers scanned the data on the card’s magnetic strip, shimmers are able to penetrate the card’s EMV chip.

ATM radars

Newer ATMs come equipped with radar systems that can detect malicious hardware and improve banking security. The trouble is that these radars themselves can be hacked to transmit data to modern-day bank robbers, as was shown by a researcher at a recent security conference.

Stay safe while banking

stay safe while banking

As long as people and money exist, there will probably be theft. It pays, then, for people to practice being safe, especially where their personal or financial information is concerned. Though modern crooks have developed a multitude of ways to compromise our banking security, there are ways to thwart their malicious attempts.

Knowing how our data can be compromised is the first step in turn the tides to our advantage. Constantly staying vigilant and aware of the newest security trends will make sure that we are always one step ahead of the enemy.

Stay safe.

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