Internet Banking: The Benefits and Risks

Something major happened in the online world in April of 2010. Sony, the company with one of the world’s largest online gaming network, was hacked. A total of 77 million users were affected and analysts estimates the embattled corporation would have to spend approximately $1.2 billion recovering from the fiasco.

The public are usually skeptical that large corporations with hundreds of millions of dollars invested in security would fall to victim to some hackers, yet history proved otherwise. Time and again large corporations fail to protect their users’ data. Sony’s demise was just the latest sad story.

No doubt there are plenty of advantages doing your banking online. For one, you can skip the woefully long queues and avoid the painfully slow process of having the bank teller verify your identity, keying in your data and I-don’t-know-what just to transfer $50.

Online, you can have it done in 5 minutes from anywhere an Internet connection is available. In fact, you can’t even bank with most financial institutions if you’re overseas.

Plus, now that all your records are digitized and online, it’s a whole lot easier for you to keep a record of your finances and do your analysis. No more shuffling through 12 months worth of receipts to file your taxes.

But if you think banking online doesn’t come with any risk, think again.

There are 3 categories of security concerns you need to be aware of when banking online:

1. Beware of phishing. Phishing is the practice of pretending to be someone you’re not. Online, phishers usually buy domain names that look similar to its target. So instead of nab.com.au, they may try to get away with n-a-b.com.au. Even their web design will look identical with its target The goal of a phisher is to get you to enter your username and password so they can log into your account and transfer your money away.

   The key to never fall victim to phishers is to make sure you are on the bank’s official website. To do this, simply go to Google and search for your bank’s name. Your bank’s official website will appear as the number 1 listing.

2. Beware of hackers. Sometimes you can do everything right and still fall victim to online hackers. Sony’s example showed just that. Yet their affected users had to cancel their credit cards, report the incident and go through the same process that you would if you lost your card. It’s a pain.

   But at least if that happened to your bank, you’d be compensated for your loss. The real problem occurs when it’s your computer that’s hacked. Not only would you have to deal with it, you’d also have irrevocably lost your money.

   To minimize the chances of that happening, make sure you install the latest computer security software on the market – and update it whenever one is available.

3. Beware of plain old scams. Last but not least, remember that you don’t have a rich uncle you never knew existed who listed you as his sole inheritor. And remember that if the king of some African country needs to give away his money, he only needs to look to this people.

   Think about it. Do you need the merchant’s password to pay your bill? So why do these “rich people” need yours to transfer money to you? A simple rule of thumb is to never give out your password to anyone. Period.