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In an unintended consequence of the newly revised federal rules on cybersecurity, banks are likely to fare much worse in lawsuits over fraud losses.
July 1 -
Many banks must go back to the drawing board in deciding which security systems to use to protect online banking users.
June 29
Even though banks are being required by new rules to put stronger security in place for online banking, two thirds of bankers think they will never be able to get cyber crime under control, according to a survey.
Nearly as many bankers, 65%, say fraud monitoring is their biggest challenge, according to the survey Fundtech Ltd. published Wednesday. It surveyed 100 banking executives from over 50 U.S. financial institutions at a June client conference.
Bankers also expressed concern over business accounts, which do not have the same liability protections that consumer accounts do. Seventy-nine percent said that just a small fraction of their business clients understand that they are liable if their accounts are taken over by fraudsters.
Seventy-four percent said their small and medium-sized business customers would switch financial institutions to get better security.
"According to our survey, addressing fraud is the bank's most pressing problem," says George Ravich, Fundtech's chief marketing officer, in a press release Wednesday.
The Federal Financial Institutions Examination Council published updated guidance on June 28, requiring banks to use layered security to protect online account access. The agency placed special emphasis on protecting business accounts, which are bigger targets because they tend to have more money than consumer accounts do.
Though the updated rules are stricter than what was required under the agency's 2005 guidance, some have said that the rules still do not address all of the threats banks face today.
