Business Law and Ethics
Nov 20, 2007
The Changes to Banking and Financial Industry Caused by the Internet
The Internet is getting popular as a mediator in banking and financial industry. The internet allowed various convenient systems including EFT, the online banking, and the mobile banking. These systems came up with a lot of positive side in banking and financial industry such as location and time irrelevant, customer empowerment with greater control of their accounts and much less paperwork. Moreover, banks achieved cost and efficiency gains in a number of operational areas. However, these systems achieved by the internet also brought out negative side in banking and financial industry the security problems such as hackings, identity thefts and internet frauds. Thus, this paper would examine how banks and the financial industry have changed to deal with these problems caused by the internet.
Italian Voice, the newspaper, stated about these problems, “As the day-to-day activities of banking, bill-paying, buying and investing continue to move online, the challenge of maintaining the ‘right’ level of online security is rising dramatically. On one side, identity theft and various types of online fraud are, according to the US Department of Commerce, a high-growth industry. On the other hand, the proliferation of passwords, PINs and security checks is a headache for some of us, and offers real potential for serious problems in certain situations (Totowa).” As it is, banks have been very cautious about these potential problems in internet/online banking system. Especially, many banks have been very vulnerable to computer hackers, who steal or discover the passwords and security codes that provide access to banks' personal computer systems. American Bakers, the magazine, informed, “Banks are increasingly hiring experts to evaluate the security of their systems, such as Price Waterhouse,...