McCombs School of Business
Knowledge

e-Security - Overview

by Brett Estell and Justin Myers, Spring 2002

Online Banking - Security vs. Profit



In February 2002, the research company Datamonitor predicted that within three years, 120 million people will bank online in the U.S. and Western Europe alone. Online banking is growing dramatically, yet that growth brings increasing costs. The most important issue associated with the growth of online banking is security – the protection of valuable information that is susceptible to unauthorized access by hackers. Banks must constantly increase security. At the same time, banks must manage costs to make a profit. This report will explore the various security methods that online banks use and their cost effectiveness in relation to consumer satisfaction and business profit. Anyone who banks should read further because, “even if you don’t bank online, you could still be at risk” since most banks’ “entire customer database could be accessed from the web” (Cole).

Bill Wade, a security expert at Arthur Andersen, outlined the business problem of online banks as “finding a balance between cost and effectiveness.” Most banks have come to agree on the need for increased security. However, differences arise over which aspect of security should to be improved and how to implement the solutions.

Several experts have presented their views on the issue of e-banking security:

  • People focus on firewalls but the weakest link is the server
  • Employees are the biggest cause of fraud
  • The weakest link is the customer’s PC
  • Digital signatures, smart cards, and retinal scanners are too costly
  • Management and control of the process is most important
  • Customers will not bank online without foolproof security
  • Outsourcing solutions by alliances will help minimize costs
  • PKI technology will aid trustworthy transactions
  • Bank websites are the most secure of any on the Internet

Overall, online banking experts differ on specifics but agree on the need for tightened security. Today’s customers are not yet ready for high technology devices to implement their digital signatures and verify their identities. Although online banking is growing, people do not want to use smartcards, retinal scanners, and fingerprint identification devices. It is the banks’ responsibility to secure all customer banking information. Customers are not ready to take on what they perceive to be unpleasant tasks in order to bank online. However, in the future of online banking, a market niche should develop for those customers who want the added security of unique identification in their homes. Only time will tell how soon that demand will arrive.

Paper outline

Why security?

Business landscape

Technology landscape Marketplace analysis

Printable format

 

 
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