Mobile banking apps pose “serious” safety risks, financial watchdog warns

Mobile banking apps pose an “important risk” to consumers as banks increasingly offer access to banking services via smartphones.

The Financial Conduct Authority, a British watchdog, is to investigate the risks posed by banking apps, according to a report by This is Money - particularly the threat of malicious apps that pose as genuine banking apps.
“One of the most popular ways for consumers to access mobile banking is by downloading a mobile banking application, or app, for their smartphone,” the FCA said in a statement. “While this provides some consumers with a convenient way of managing their money, it can also lead to the risk of malware.”
“This can occur if a consumer downloads an application that appears to be from a genuine payment provider but is actually malware designed to capture sensitive financial information. Malware is an important risk for firms to consider, as it can result in financial loss and undermine consumer confidence in mobile banking.”
The FCA said that many banks are already aware of the risks involved in allowing consumers to access sensitive information via apps.
“Many of the firms we have spoken to are aware of these potential issues and we have seen firms take steps to manage them. Examples include firms providing clear security information to consumers, issuing warnings to only download applications from official stores and providing antvirus software.”
The FCA also warned that the use of third-party providers for IT solutions could spell risks.
“For firms to successfully provide mobile banking services to their customers, they will be dependent on IT systems, technical expertise and detailed knowledge of the payments system. Many of the firms entering this market are using the specialised services of outsourcing partners,” the FCA said. “This leads to the risk that there may be a chain of companies involved in a customer’s transaction,resulting in a greater likelihood of a problem occurring.”