Digitalization of the Banking Sector

The digitalization of the banking sector- A consumers’ perspective

The internet offers almost unlimited possibilities. Every day we browse the web, buy products online, or interact via social networks. But this year alone, cases like the Facebook data abuse scandal have shown clearly that protecting user-focused, sensitive data is becoming more critical than ever before. Also, user behavior is changing as people become more aware of data protection. Users are learning more about privacy, are savvier, and start demanding data security. This applies in a private environment but especially concerns companies worldwide. Hence, security is no longer considered as something nice-to-have but has turned into a prerequisite for building trust between customers and companies. This development is also reflected in current data protection guidelines such as the General Data Protection Regulation (GDPR).

Data protection despite digitization

Again and again, the topic of digitalization in relation to data protection leads to heated discussions. The German Federal Government is also working intensively on this topic and has made digitalization and data protection primary points of the agenda. A focal area includes the risks and future potential of digitalization measures; especially in consideration of data protection. But how can companies meet this pressure to digitalize without jeopardizing the security of sensitive user data? This is the challenge which many companies face today. Using the banking sector as an example, we will show you how to benefit from digitalization while protecting user data.

Mobile Banking: A consumer guide for higher security standards

Online banking has become increasingly important over the past few years. According to current figures, up to every second German has indicated to use online banking in the year 2018. In particular, the proportion of mobile banking users has grown rapidly. But what are potential risks when using mobile banking applications on your smartphone? Often, you do not just need to download one app to do your banking on the smartphone. Instead, you may have multiple accounts such as several saving accounts and depots. As a result, you quickly accumulate various apps. In all of those, you expose sensitive data.

The most common risks include:

  • Outdated security standards due to missing app or system updates
  • Unsafe locking mechanisms for unauthorized persons
  • Publicly accessible WiFi networks
  • Log-in data theft
  • Software downloads from insecure sources
  • Malware

The Solution

Fortunately, these risks can be mostly avoided if you take some valuable but simple tips into account. Here are some examples:

Use a virus scanner on Android

If you’re an Android user and your phone is more than one year old or you like to customize the phone with a lot of apps, it makes sense to get a virus scanner. Many Android phones don’t have the latest security updates and are always at risk. Try to find a recent comparison from a magazine or blog you trust and install the one that fits your use-case and budget. A lot of them even come free.

Perform regular updates

You should also pay close attention to updates for your operating system and apps. As soon as an update becomes available, download it. It’s a common procedure for developers to take care of security issues with every update, even if they don’t explicitly say so. This tip does not only apply to banking apps but to all other smartphone apps. 

Use a password manager

Modern iOS and Android devices have built-in password generators and automatically manage them. Therefore we advise you to use generated passwords which can never be guessed. Also, generate a unique password for every app or service you use. More sophisticated users can install a dedicated password manager to sync passwords between different operating systems and invite family members. If services offer a so-called two-factor authentication, enable it. It will send you a verification message every time someone tries to log in to account from a new device.

As you have seen mobile-based digitalization efforts come with potential risks which can easily be dealt with if you follow some tips and increase your awareness of potential security risks. Moreover, it is essential to consider all the benefits that the mobile digitalization of the banking sector offers. Examples include optimized processes, time savings, and provide a level of increased convenience as we can take care of our banking business anytime and anywhere we want.

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