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Banks need to lift security stakes: NAB

The National Australia Bank (NAB) yesterday claimed that the banking sector is not doing enough to educate its customers on the security shortfalls of internet and mobile transactions, and has also begun to investigate how to evaluate the level of security for each customer to try to rectify the issue on a case-by-case basis.
Written by Michael Lee, Contributor

The National Australia Bank (NAB) yesterday claimed that the banking sector is not doing enough to educate its customers on the security shortfalls of internet and mobile transactions, and has also begun to investigate how to evaluate the level of security for each customer to try to rectify the issue on a case-by-case basis.

Speaking at the Banking Technology Summit 2011 yesterday, NAB's head of fraud operations and investigations Grant Baxter said thatthe banking sector was failing when it came to informing its customers of the dangers associated with conducting online transactions, particularly when using smartphones.

"I had a look at the big four websites, and then had a look at the Teacher's Credit Union of Australia. The best information, the most accurate and up-to-date information about exposures around smartphones, was actually on the Teacher's Credit Union sites. We really need to lift our game," he said.

"We rely on others [to educate the public], we rely on the Australian Federal Police, we rely on Today Tonight and A Current Affair to educate. Banks need to own this as an issue."

Baxter said that the existing methods of educating users weren't enough, and that consumers were becoming desensitised to the dangers.

"We have a lot of work to do, and, once again, it comes back to innovation. Something new comes up from a fraud, so we send you a letter with my name on the bottom saying 'Be wary of this. Be mindful of this,' and we send you an internet banking message. That just doesn't cut it anymore."

He said that the bank was looking at how it could score its users on their level of protection when using electronic banking facilities like mobile and internet banking.

"We've done the work — we're actually now getting out there and doing the review as we speak around how effective that is and what people are getting," he said. "What we saw initially was people saw they were at 20 per cent security, and they wanted to push it to 40 per cent by adding SMS security and providing dual authentication and that sort of thing."

However, Baxter noted that the challenge lay with ensuring that those that fail to raise their security do not present a risk to themselves and the bank.

"We have that real question around the recalcitrants: do we want them as a customer? I think we still do. How do we actually get them to price for risk? It's a lever we'll definitely be talking."

While Baxter said that the next lever could be to introduce premiums, the bank currently has no plans to introduce such a system.

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