IS MOBILE BANKING SAFE?

Headnote

Banks are trying to appease consumers' worries, but in many cases, their efforts fall short.

Digital security is often an act of calibration. Banks need to protect financial information without making it a hassle for customers to gain access to it. They also want to throw enough resources at the problem, without needlessly overspending.

Mobile-banking security presents its own set of calculations. The channel does not yet have the traction of online banking, making it less of a focus for fraudsters. At the same time, nobody wants to destroy consumer confidence in mobile banking through early missteps on security.

Mobile security- or at least consumers' perceptions of it- already may be presenting a challenge for mobile banking adoption. The number of smartphone owners ranking mobile banking as unsafe or very unsafe rose 54 percent between 2009 and 2010, to a total of 40 percent, according to a July 2011 study from Javelin Strategy & Research, a trend the research firm called "dangerous and significant." In an October 2011 report, Javelin also found that 53 percent of smartphone owners say security is the main reason they don't use mobile banking. Further, 67 percent of consumers say they think mobile banking is riskier than online banking.

Despite these fears, mobile banking continues to enjoy steady growth. It more than doubled from 5 percent of online adults in 2007 to 12 percent in 2010, according to a January 2011 report from Forrester Research Inc. Forrester expects 20 percent of U.S. adults will be using mobile banking by 2015.

Even so, banks' actions and messages around security appear to be missing the mark for a large segment of potential customers. Security is "the elephant in the room" when it comes to mobile banking adoption, says Mary Monahan, executive vice president and director of mobile banking research at Javelin.

To some extent, consumers' instincts are correct. Certain characteristics of mobile devices do make them more challenging to secure. The small screens, for example, obscure irregularities that might normally reveal clues about phishing attacks, making mobile users three times more likely than desktop ones to submit personal information to phishing web sites.

The speedy nature of mobile is also a problem - users are more likely to ignore security...