National Australia Bank is to offer SMS-based two-factor authentication as an optional security mechanism to all online banking customers.
NAB teamed with telecomms firm Telstra to develop the mobile SMS service, which will provide customers with PIN-protected access to Internet banking services.
Once an online payment is initiated, the bank will send customers a randomly generated code via SMS - to be used as a one-time login - to a customers' mobile phone. The customer then enters the code into the payment confirmation screen to complete a payment request.
The bank piloted the system for five months with both local and overseas customers, although just 500 customers opted to take part in the pilot, compared to the expected 1000.
Ean van Vuuren, head of channel solutions, deposits and retail transactions, NAB, says: "This new security feature offers a balance between improved security and customer convenience."
The Australian Bankers Association (ABA) said in March that the country's banks are set to introduce an industry standard for two-factor authentication for verifying online banking customers later this year.
Research by the ABA shows that customers do not want to use biometric devices for authentication. Instead, banks are looking to adopt mobile messaging systems or token-based random number generators.