Those who have yet to embrace online banking are mostly viewed as creatures from another planet by their friends and families. “What? Do you still go to the bank to transfer money? That’s so inconvenient!” This statement is certainly uttered more frequently in German homes. That’s because almost 36 per cent of the population do not yet have an online account with their principal bank. One of the reasons for this reticence among bank customers is the aspect of security and the question: “is my online data really in good hands?” Read on to discover how secure online banking really is in 2022.
Your own personal data vault
Online banking was first introduced in Germany during the 1980s. Back then, BTX (“Bildschirmtext” or screen text) was the first and only online service available in the Federal Republic of Germany. To transfer money, bank customers needed a BTX terminal with a functioning BTX line, a reading device, a TAN list (of transaction numbers) as well a login with a password. While this technology made it possible for customers to transfer money electronically for the first time, the system was expensive and rather slow. That’s all ancient history now, as banking via the long-outdated BTX system was abandoned on 10 May 2007.
Fast forward to 2022, where online banking has never been more secure, thanks in no small part to the use of 2FA (two-factor authentication). This system uses at least two steps to securely identify and verify the user as the account holder. The use of a password-protected portal in conjunction with a TAN device is a common way of employing 2FA to secure electronic funds transfers. In contrast, MFA or multi-factor authentication promises even greater security than 2FA, as MFA requires users to pass through more than one mandatory security and validation process in order to confirm their identity. MFA offers much-improved protection against hackers in particular because usernames and passwords on their own can no longer guarantee reliable protection.
Opening a bank account online
Nowadays, banks can be found not only on the nearest high street but also online. In fact, some providers have specialised in the online market. Instead of maintaining branches in cities, they operate call centres staffed by employees who have a sympathetic ear for all customer concerns and inquiries. This saves the bank occupancy and personnel costs but also puts the topic of ID proofing into the spotlight. After all, anyone wishing to open an account online must be able to verify their identity. Probably the best-known authentication method is the video identification process, whereby an external company (not the bank itself) makes contact by video call and asks the new customer to hold their identification card up to the camera. For most users, this method is rather inconvenient because authentication can only be performed during the service provider’s business hours. What’s more, some customers may not be comfortable allowing an external reviewer to inspect their home surroundings.
Identity protection with ID proofing
ID proofing offers a solution that is easier, quicker and, above all, more secure. In terms of its technology, ID proofing operates at the cutting edge. If a user’s identity needs to be verified, the image of an identity card can be captured by the camera on the device (smartphone, tablet or laptop). The document is automatically recognised and filed. Good camera quality and lighting conditions are important for capturing the image of an identity document. ID proofing also detects important security features on identity cards such as holograms or lenticular printing (“flip images”). With the help of the video selfie function, the user’s identity is then automatically compared with the identification document. The powerful biometric facial verification functionality protects against attacks using masks, prints or screens, thus making identity theft virtually impossible.
Online banking during the COVID-19 pandemic
Data released by the Association of German Banks shows that online banking in Germany grew by almost 14 per cent from 2019 to 2020. The coronavirus entered all of our lives at the end of 2019. The fact that access to bank branches was also impossible or extremely limited during the ensuing lockdowns explains the rapid uptake of online banking. Either way, online banking has never been more important in these times of a global pandemic and digitalisation. The technology and the underlying security measures not only allow us to make contactless payments but also to order food from online supermarkets and delivery services, stream music and films with ease or shop for a new winter coat.