The Financial Conduct Authority Tuesday issued warnings about mobile banking risks following its preliminary review of such services.
The authority reported in its May study that one in five United Kingdom adults had made a payment using their phone, while more than one in four consumers use their mobile to check bank balances. The regulator concludes consumers are at a greater risk for fraud, malicious software, IT meltdowns, and human input errors as these services become more popular.
The regulator’s concerns about some of these issues already had surfaced in March when an IT error left customers of three leading financial institutions (NatWest, Royal Bank of Scotland and Ulster Bank) unable to access their mobile banking applications for several hours. Over the next few months, the authority will survey financial institutions and examine how companies are seeking to mitigate risks around fraud and security, as well as other issues.
In a statement, the authority said:
“Mobile phones, with their smaller screens and limited keypad, may make these errors more likely, therefore it is important for us to understand how firms are mitigating this risk. We also want to understand whether firms have appropriate processes in place to resolve mistakes if they do occur.”
With mobile payments and banking adoption increasing in the UK, issues outlined by the FCA will become more commonplace. While some concerns are more easily addressable than others, improving the consumer mobile payment and banking experience is the next step and will likely lead to expanded use of mobile payment and banking services.
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