Balancing Convenience with Security in Mobile Banking

Considering both the newness and sparseness of mobile banking offerings, initial consumer take-up has been surprisingly strong - with almost 1 million US consumers using mobile banking at the end of 2007. Yet dire consequences may result from security procedures that are either too lax, or too stringent. If consumers find registration and authentication procedures burdensome, adoption of this new channel will slow. If data security is compromised, negative publicity will quickly sow fears about the safety of banking "over the air."

Banks must also be wary of mobile operators that wish to control the emerging mobile payments space and profit from the anticipated high volume of mobile transactions. Although the mobile operators deserve their fair share of mobile banking and payments revenues, TowerGroup believes that consumer banks -- with deep expertise in payments processing and maintaining trusted consumer relationships -- must be the central player in this burgeoning market. By implementing mobile banking solutions that align with market expectations and needs, consumer banks can lay the foundation for mobile banking and payments success -- and ensure their central role in future deployments.

The TowerGroup ViewPoint, titled "Mobile Banking and Payments Security and Usability: What's in Your Mobile Wallet?" by George Tubin, research director in the TowerGroup Delivery Channels and Financial Information Security practice, provides insight on key issues surrounding mobile banking development, authentication and security. The research also discusses the challenges of balancing customer trust with convenience.