Better authentication allays online banking fears
By Isabelle Chan, ZDNet Asia
Monday, June 18 2007 16:00 PM

Two-factor authentication (2FA) may be a regulatory requirement and an additional cost for Asia's banks to bear, but the enhanced protection may be what the financial institutions need to boost confidence in Internet banking.

No thanks to phishing scams and fake Web sites, concerns over the security of online transactions have risen over the years, prompting banks to do more to secure the Internet banking channel.

Banking Web sites now have a list of frequently-asked questions about Internet security to educate its customers on how to better protect their online transactions from fraud. Regulators like the Monetary of Singapore, Hong Kong Monetary Authority, and Bank Negara Malaysia have also issued guidelines--albeit of varying degree--for banks to implement 2FA as an additional layer of security on top of the regular password.

Are consumers more confident in Internet banking today?

For OCBC Bank, the results have been more than encouraging in both Singapore and Malaysia.

Patrick Chew, head of delivery for OCBC Consumer Financial Services, said that online banking activity in Singapore has risen since the bank began offering the stepped-up security measure late last year.

"The total number of transactions has actually gone up by 20 percent and the average value has also gone up by the same percentage points. And what's interesting is the average value per user or customer, has gone up by more than 50 percent," said Chew.

"What this tells us is customers are [logging on] to Internet banking and are doing more; they are [conducting] transactions of higher value than they've ever done."

Without a doubt, 2FA has raised the banking customers' level of confidence in online banking, said the elated OCBC executive of 15 years.

"We're glad that this is the situation, because prior to 2FA, there were a lot of doomsday predictions that transaction volume would absolutely drop," Chew said. "[Customers] are now telling us that we're doing the right thing for them."

Sheila Wong, head of delivery for OCBC in Malaysia, said that compared to last year, the bank has almost doubled its Internet banking customer base and the number of financial transactions per month has increased by about 20 percent.

DBS, which has operations in Singapore and Hong Kong, has... Read the full story