Don’t Bank on It: Kaspersky Lab Says Mobile Security Risks Hurting Financial App Adoption

Mobile banking apps offer huge potential for financial institutions. As noted by The Wall Street Journal, more than half of all smartphone users already leverage free banking apps. Even if banks started charging for the privilege, most customers would pay between $1 and $3 per month.

According to new research from Kaspersky Lab and IDC, however, many clients are still reluctant to engage with banks and credit unions through mobile apps. Of the 36 percent of users still opting for in-person and telephone banking, 74 percent said security was their most pressing concern. Have banks finally hit maximum return on investment when it comes to mobile?

Kaspersky Lab Sheds Some Light

As noted by IT Pro Portal, even among clients comfortable with completing bank transactions online, there’s a desire for improved security. Among both users and nonusers, 85 percent said they would increase their app usage “to some extent,” while 44 percent said their usage would increase “significantly” if more security was integrated.

Less heartening for the finance industry, however, are the 32 percent of respondents who said they had no plans to use mobile banking services — ever. For credit unions and banks, this is bad news. While customer comfort and ease-of-use remain top mobile app priorities, companies also stand to gain big benefits from the reduction in transactional costs when users choose to leverage smartphones instead of visiting brick-and-mortar branches.

The Wall Street Journal piece noted, for example, that 94 percent of app users check account balances online, while 48 percent deposit checks and almost the same number pay bills online. Without the need for human oversight, all of these services are more cost effective on mobile.

Furthermore, banks have already had some luck charging for premium services, such as fast bill paying or mobile deposits. When it comes to really tapping this burgeoning market, however, there’s a critical question: Is it possible to turn anti-app users into believers?

Mobile Banking Is More Than Just Convenient

According to the Toronto Star, recent data out of Canada suggested that mobile banking users are more satisfied with their financial institutions than those who skip the app. Part of the increase comes from convenience: Customers can easily check balances or perform simple transactions anywhere, anytime.

But increased financial literacy is also crucial. Paul McAdam, senior director of banking services at J.D. Power, told the Toronto Star that clients using the app every day have a better understanding of their balances, specific bank processes and how they can avoid incurring fees.

Double Down on Security

With revenue potential for banks and increased financial freedom for users both bundled up in mobile apps, financial institutions need to double down on security. As noted by Information Security Buzz, this means not only implementing stronger security measures, but also actively promoting them. According to the Kaspersky Lab data, more than 80 percent of users want some evidence that their bank is taking steps to improve the security of their mobile experience.

Some of these steps even seem counterintuitive, such as banks reporting to users that viruses or malware were detected on their device. But instead of driving consumers away, reports of found and neutralized threats serve to reinforce the notion that banks care about the safety of consumer data and are taking proactive steps to limit mobile risk.

Mobile banking app adoption remains slow as users struggle with the specter of financial data compromise. If financial institutions want to onboard naysayers and convince current users to pay additional service fees, security is the solid bet. Actively track threats, report any findings and make sure users know exactly how new apps will protect their assets.

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Douglas Bonderud

Freelance Writer

A freelance writer for three years, Doug Bonderud is a Western Canadian with expertise in the fields of technology and...