Is Online Banking Safe?

By Gail Rickards

Online or I-banking security parallels most of traditional banking’s safety features. Even though technology changes rapidly, the ideas stay the same. Consider what we’re used to seeing at our local bank branch office:

Offices Designed to Protect Cash
When you walk into your bank, it looks and feels secure. There’s a heavy vault door, and the tellers sit behind a protective counter. The back area remains locked and well supervised. Your bank may even have a guard in the lobby.

Identification and Procedures
If the teller doesn’t know you, you will be asked for ID–and a supervisor may have to approve your transaction. There are policies and regulations about everything, even confidentiality. For instance, ask a teller for your balance, and the answer is written, not spoken.

Your Responsibility
For your part, you pay attention to the whereabouts of your checkbook and ATM card, and you keep your PIN a secret. Every month you check your statement to be sure the bank’s accounting matches your own.

All this gives you a sense of security and peace of mind. To foster a similar peace of mind, I-banking adapts these features to its new technology:

How An I-Banking “Office” Is Designed
There isn’t a vault door, but the computer system that runs an Internet banking software program is designed with a similar purpose: Instead of securing the cash, the goal is to keep the information safe.

Called “system architecture,” the computer system design controls where information is located, how it is gathered, and how it is sent to you over the Internet. Information is stored in data files, and files are separated for safety–checking account information, for example, is never mixed with any other data.

System architecture also controls which computers, modems, and other communication devices are connected to the outside world. The fewer there are, the less chance of a hacker or other threat finding its way into the bank’s system.

A Different Kind of Lobby Guard
Bank staff and guards constantly watch who is coming into and leaving the lobby. So does a “firewall.” A firewall is a computer in the bank’s system configured to watch traffic coming in and going out–and to permit certain requests to log onto I-banking and block others. It also sounds an alarm when an unauthorized person tries to get into the site.

I-Banking ID and Other Protections
There isn’t a teller to ask for your driver’s license, so you have to identify yourself. User IDs and passwords control who can legitimately gain access to the site. Each person who applies for access gets a separate ID and password, even if he or she has a joint account.

Once you have your ID and password, you must enter them correctly when you log on. Usually, if you make three errors you’re temporarily locked out. By denying access to the site, the I-banking program protects against someone with part of your codes guessing the rest.

Procedures control which users have access to what information. I-banking creates separate portfolios for each user based on which accounts each person actually signs on. For instance, if your husband has a savings account in his name only, you will not see that account in your portfolio.

Scrambled Messages Are Confidential
There’s no teller to protect you by writing down your balance, but encryption will protect all of your communication. Encryption randomly scrambles the characters of everything that you and the site send and unscrambles them on receipt. The current standard is 128-bit encryption, with a mathematical complexity too daunting for hackers to break.

Your I-Banking Responsibility
Just as you protect your checkbook, you need to protect your user ID and password. When you change your password, follow the site’s recommendations about length and mix of letters, numbers, and symbols. Don’t ever share your password. Read the site’s safety tips and other information provided under the “Help” button. Find out how to exit properly and learn more about removing the traces of your I-banking session stored on your hard drive.

Still Not Convinced?
Don’t let the word “Internet” cloud your thinking about safety. I-banking is still banking, and your accounts are still insured by the FDIC up to $100,000 or more. It’s just banking delivered in a new way–the way of the future.