Articles

Risks that are involved with Internet based financial activity cannot be ignored and dealing with such risks must be planned meticulously.  The Internet is an unstable environment where the landscape changes constantly, new threats and obstacles arise every waking hour and the issue of security reoccurring.  When banks take on the responsibility of offering services online they must be armed with the latest technology to protect against attacks, contingency plans to ensure operation and integrity of transactions.  Bankers argue that since the Internet is not owned by anybody and users are spread all over the world, security would be almost impossible to implement because of different legal, tax and regulatory regimes which would apply (Credé, 2002).  In order to deal with these concerns banks must have well thought out and up-to-the-minute security policies and procedures.

The Major Players

The five main banks offer a variety of services between them with some having a definite point of difference.  All of the major banks offer standard banking services online to their customers.  Services like Balances and Transactions, bill payment, Funds Transfer between internal and external accounts.

All banks require their customers to register for online services using a process that involves a standard signup online or over the phone.  For the initial registration any telephone banking details are usually used to setup the account until the user has chosen to personalize their online banking experience.  Password protected accounts an industry standard and used in conjunction with security such as 128 bit encryption SSL (Secure Sockets Layer) which is supported by all modern browsers.  A security feature that is becoming more common now is the auto log-off after an extended period of account inactivity; all major banks use this feature with differing time limits ranging from 5 to 20 minutes and the option to change the default log-off time in some online accounts (www.westpac.co.nz).

All the major banks have abundant and relatively similar information on their websites regarding the services they offer to clients online and the procedures that ensure your online banking is safe.  The BNZ uses a certificate to initiate encryption of all communication between the user and the Bank of New Zealand to protect the confidentiality of the users’ information (www.bnz.co.nz). Potential online clients are made aware by the organisations website that they will need the correct software in the form of a browser that can handle 128 bit encryption, that the organisation uses a secure server and all the major banks advise potential and existing users on best practice for things such as virus prevention, password protection and general security measures.

The points of difference mentioned earlier arise from the major players in the online banking scene.  ASB was the first bank to introduce online banking in New Zealand and has been at the cutting edge recently with the largest and most diverse range of services on offer to its clients both in the personal and business banking areas.  ASB bank's online business services include an online payroll facility which allows your business to administer the payment of its employees from anywhere on the globe where you have access to the internet this combined with real-time electronic commerce in credit card processing and a future foreign exchange facility put ASB at the head of the online banking industry in new Zealand not only in services offered but in all aspects of security policy and procedures.

ASB maintains a dedicated Information Systems Security team who monitors threats from the Internet and performs rigorous testing to ensure that its standards are kept at a very high level.In conjunction with the IS team ASB employs a highly qualified team of E-Commerce system administrators whose job it is to ensure system stability and security.  ASB regularly outsource verification of its security to independent consultants who review such things as firewall configurations, network device security, web server security and web application security (www.asb.co.nz, 2003).

Online Banking in New Zealand Today

The New Zealand public has proven to be reluctant online purchasers compared to our American or European counterparts (Türker, 2000) but that may just be our window shopping mates rates nature (you can't really haggle online).  This poses the problem of trust for financial institutions offering online services where money and sensitive information are transferred there is increasingly less resistance to this and the implementation and maintenance of efficient, secure and robust systems with sound policy for their management is essential to the future of the industry.

Most of the criteria below are standard within the online banking industry in New Zealand.By allocating points to each of the criteria we can arrive at a method of ranking providers of online banking by their services and security.  In order to evaluate the services of online banking providers we must look at whether they supply the following criteria and what their score is out of 55:

Clearly ASB offers its clients the most comprehensive range of online services.  Both business and personal online services add value to the online banking experience with lower fees.  Security is a major component in the online banking mix for ASB offering policy and procedures above the industry norms their dedicated and concerted effort to protect their customers interests coupled with a wealth of experience in the industry make them the only choice as the New Zealand's most secure internet banking provider.

Conclusion

New Zealand has not yet reached the levels of security implemented by some foreign banks e.g. Barclays UK uses a 3 tier password system comprising of a 12 digit membership number preceded by your surname, a five digit pass code, another password whose entry consists of two random letters from your password entered individually (www.barclays.co.uk, 2003).

As technology advances and the Internet expand online banking transactions will become commonplace and the preferred method of shifting funds and the primary access for other financial functions.  According to Dr Richard Sandlant a senior analyst for AC Neilson, “Attitudes to online banking have changed dramatically over the last few years, with the proportion of Internet users adverse to online banking falling from 32 percent in 1998 to just 11 per cent at the end of 2001” (Ping, 2001).  Rapid development requires new policies both privacy and security.  New procedures and tools will have to be devised to protect information from undesirables.  As the use of Ecommerce continues to grow we may forget what a bank looks like!

References

Credé, A. (1995). Electronic commerce and the banking industry: the requirement and opportunities for new payment systems using the Internet. Brighton: The 45th Annual Conference of the International Communication Association, Albuquerque, New Mexico, 25-29 May.

Personalising your PC Settings to Optimise your Security. Retrieved September 10, 2003 from ANZ website on the World Wide Web: http://www.anz.com/nz/inetbank/security.asp

Security Certificates. Retrieved September 10, 2003 from BNZ website on the World Wide Web: https://www.bnz.co.nz/Internet_Banking/1,1184,10-147,00.html#Security_certificates

About Security. Retrieved September 10, 2003 from ASB Bank website on the World Wide Web: http://www.asb.co.nz/section582.asp

Türker, M. A. (2000). Electronic delivery of financial services. Granti Technology Research Group report.

Ping, A. (2001). New Zealand Growth. Retrieved September 19, 2003 from Unitech website on the World Wide Web: http://hyperdisc.unitec.ac.nz/ia02s1/kenneh01/pages/nz_growth.htm

Online Banking - Putting you at the front of the queue. Retrieved September 15, 2003 from Barclays Bank website on the World Wide Web: http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?task=channelgroup&site=pfs&value=2808&menu=2646