NEWS PAPER ARTICLE:
Internet Banking & Trust Encryption
MAY 1998
THIS ARTICLE TALKS ABOUT THE SECURITY ISSUES IN INTERNET BUSINESS WITH REFERENCE TO LUXEMBOURG:
A new debate has arrived with the advent of Internet banking, concerning trust - trust between the bank and its clients. This issue is critical because, if no trust exists, then no bank-client relationship can succeed.
Some banks are now using the Internet to achieve new business goals using the new medium, by offering the same suite of banking services and products through a new technology.
In the United Kingdom, four major banks have joined up with Microsoft to offer online banking services later this year based on Money98. In Luxembourg, Banque Internationale and Fortis Bank are leading the way in Internet banking, along with Flemings in investment fund services - and others are following.
The main growth areas are in retail banking (both commercial and private clients) and private banking, which comprises wide-ranging and varying services. Also included here are investment fund promoters who can enjoy a much wider geographic spread of their client base.
Thus, use of the Internet is not restricted to customers enquiring about daily or weekly fund movements. Internet applications are now being integrated and launched to offer a higher-level service to both existing and new client-bases.
From the perspective of the client, the paramount criterion lies in transmission, both in trusting that the transmissions are secure and also that the transmission speeds are not unresponsive.
If there is any doubt in the mind of the clients concerning not only accessing or intercepting account data, but also in authorizing transfers, then they will not trust the system and will resort to alternative methods - or banks.
The comparative vulnerability of Internet transactions can be exaggerated, of course. Which credit card holder has not divulged their card details over the telephone, or given it to a restaurant waiter or shop assistant who takes it away and returns with it a few minutes later?
Looking at the same concept from a different perspective, many potential clients actively seek banks which offer secure Internet banking, enabling them to authorize transactionsor use other services without leaving their home or office.
This demonstrates that Internet banking is now following ATMs and telephone banking - which does not involve sending encrypted PIN numbers via telephone lines - as the next big phase in electronic banking.
The phenomenal success of ATMs has been convenience, 24-access (as long as youre not at the end of a queue on a bank holiday week-end when the person before you just took the last few notes!) and security. The latter is based on PIN codes and plastic cards.
Internet banking systems require similar security solutions, with user identification and passwords the visible means. What is not visible however, for either ATMs and Internet banking, is the different extents of electronic tagging, encryption, identification, digital certificates, non-repudiation and more all these are invisible to the user but are intricately employed in the engine of the security module.
It is interesting to note that Internet-based encryption algorithms are based on higher levels of encryption than used for ATMs (mostly 56-bit keys).
Encryption is one of the foremost means by which data can be protected from interpretation by unauthorized interception. Various solutions are currently available, but two recent events may result in a new generation of encryption products.
At the same time, IBM has announced that it is promoting a new encryption algorithm to the US government (a 128-bit key solution that can be built into hardware, software and in items such as smartcards) as a possible replacement for the Data Encryption Standard (DES).
Before a bank takes the plunge into Internet banking, it is essential to ensure that it has a strategic plan incorporating both business objectives and a marketing strategy. These will provide a solid foundation from which to use innovative means, such as the Internet, to compete among the leading players in the market.
Other new developments are set to influence the security picture. Tim Berners-Lee (founder of the Internet) recently announced that he is currently studying the lack of anonymity which accompanies Internet traffic, and is attempting to come up with a radical new approach.
At present, most WebSite visitors and e-mailer users are oblivious to what data their Internet traffic is tagging along with it and this goes far beyond cookies and applets.
This article first appeared in the May 1998 issue of Luxembourg Business. It is the Copyright (1998) of International City Magazines (ICM S.a.r.l.) and we use it with their kind permission.
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JOURNAL ARTICLE:
Special accounts: Banks create niches for all ages
By: Laura Bruce Bankrate.com
THIS ARTICLE TALKS ABOUT HOW BANKS ARE TARGETTING DIFFERENT CUSTOMERS OF DIFFERENT AGE GROUP.
For teen-agers to retirees and everyone in between, many banks, thrifts and credit unions have niche accounts supposedly designed to meet your needs and help you achieve a goal.
For instance, there are plenty of institutions that offer special accounts for children. Most require a minimum balance of just $1 to $5 and make some effort to teach kids about managing their money.
No doubt about it, this requires a lot of paperwork for very small deposits -- the institutions are banking on mommy and daddy making big deposits, having a mortgage, a loan and a credit card with the bank, too.
Kid accounts:
United Bank, headquartered in Vienna, Va., goes the extra mile. Kids 12 and under can open an account with just a buck. They get a coupon book with 25 $2 coupons -- which they can deposit, one coupon per quarter. Although it's spread over six years, the bank is giving kids $50 they can plunk in their accounts. In addition, United Bank gives children's accounts a slightly higher interest rate than its accounts for adults, so those tiny deposits grow a little faster. Plus, they get a piggy bank. As children get older and need checking services, financial institutions try to develop products that will keep them as customers for years to come, says First Union's Lorraine Fischer.
"That's the hope. We try to have the products they need throughout their life cycle."
Student accounts:
First Union's Express Checking for students is aimed at doing that. First Union's student checking account offers a tempting deal to students who don't feel the need to visit tellers. There is no minimum balance required; unlimited check writing, no monthly service fees and no per check fees. If the student's parents also bank with First Union, the student gets four ATM withdrawals, inquiries and transfers -- 12 transactions in total -- at non-First Union ATMs per month. All the student has to do is agree to bank online, by phone, or through ATM.
A survey by the American Bankers Association shows that nearly 30 percent of banks with assets under $300 million offer senior citizen checking accounts, while 55.6 percent offer student/youth checking accounts. At medium-size banks the spread is even more pronounced with 34.6 percent offering senior checking compared to nearly 77 percent offering student/youth checking.
Senior accounts:
When it comes to accounts for seniors, one of the most obvious differences is at what age they start. Some institutions, such as Oceanside Bank in Jacksonville, Fla., allow people to sign up for a seniors account at age 50, while others have a minimum age of 60 or 65.
Boomer accounts:
One of the more unusual niche accounts is the boomer account offered through San Diego-based Bank of Internet. It's for the so-called "sandwich" generation.The minimum age to open a boomer account at Bank of Internet is 45.
Some banks may offer free student or senior checking with no minimum balance, but may limit the number of checks you can write per month. That same bank might offer a free, regular checking account with no restrictions on the number of checks written if you maintain a $300 minimum balance.
You're the only one who will know which account is the better deal for you.
-- Posted: June 20, 2001
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