17 October 2017
Stanley Epstein
Stanley Epstein

Stanley Epstein

Stanley Epstein - Citadel Advantage Ltd

44Posts 181,172Views 52Comments
Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Is Mobile Banking a disaster waiting to happen?

31 July 2010  |  5928 views  |  1

The news this past week has been all about a Citibank mobile banking glitch. Apparently a flaw in a version of its iPhone m-banking application resulted in it improperly storing customer account information.

Now this is something that could happen to anyone, you will say. But should it?
The past year has seen an explosion of new banking services and stand-alone banking applications designed for the mobile phone. The advent of the smartphone has ensured that developers are having a field day in the production of new apps, many of them geared to the financial market.

Many bank's new mobile apps cover services already pioneered by other early innovator banks who have introduced smartphone banking services - like the ability to view account balances, pay bills, transfer funds, get market and even conduct insurance business.

Many of the new entrant banks are also hoping to leapfrog the competition with plans to offer not only mobile banking capabilities but also a range of other ancillary services via the smartphone platform. The Apple Store boasts that over 200,000 apps are available for the iPhone. No doubt many hundreds, if not thousands are suitable for financial and banking transactions. It has even been suggested that banks should do a search of these apps as the starting point for its mobile banking service development.

With this huge explosion of mobile banking services must come the question - have banks back office accounting systems, procedures and security really been revamped correctly to match this new banking instrument?

My guess is that the answer is "no". I think that Citibank's problem is just the start of many others, that other banks are going to face in the coming months.
From experience I know that banks integration of new technology based products and services into the rest of the bank's operations is notoriously sloppy, especially if there is pressure to introduce a new service to either bring a "first" to the market or just to keep up with the competition.

In producing tangible products like washing machines or motorcars or the like, product manufacturers subject their creations to rigorous testing to ensure its durability and safety, just to mention two issues.

Do banks ever really do the same?


Comments: (1)

John Dring
John Dring - Intel Network Services - Swindon | 03 August, 2010, 18:28

This is another Blog that doesn't render fully on my IE6 browser. Firefox is OK though.

So... I doubt any testing can be completely secure, without checking the source of the appl which in itself is a black art.

Apps can contain trojans that don't activate for a long while or until a certain event is reached, and then can cache, email, log, forward a lot of information.  Testing with network Sniffers just doesn't catch this delayed activity.  You basically run the app on trust, the same way as you use OnLine banking systems on trust.

Apps are a problem though because people blindly accept the Ts&Cs and small print, the same as they do when installing PC software, or when signing a finance agreement.  You want the service/cash - you sign the contract hoping its safe because understanding it all (or even having the time to read it) is not possible.  So when the App says it needs access to your contacts, network access, location lookup access etc, you barely have a chance to understand why they need such things. 

At least when the washng machine suffers a manufacturing fault, the manufacturer fixes or replaces it and probably covers you for any losses incurred as a result.  Will your bank cover your mobile banking app in the same way?


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Stanley is a Director and co-founder of Citadel Advantage Ltd., an international consultancy to the financial services industry that provides specialist services and training in the areas of operation...

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