Potential dangers for consumers using mobile banking highlighted
More than a billion people are expected to use their mobile phones for banking services worldwide by the end of 2017
Mistakes made on small smartphone keypads and fraud have been highlighted by a City watchdog as potential dangers for consumers using mobile banking.
The Financial Conduct Authority (FCA) said consumers should look at ways to protect their phones and tablet computers from fraud and viruses, while also being careful when transferring cash to make sure they type in the right amount and do not pay the wrong person.
It is kicking off a full review into the booming mobile banking sector, looking at the risks to customers and what banks and mobile phone firms can do to help protect consumers and ensure the system is not being abused for money laundering purposes.
The watchdog carried out initial work on mobile banking last year and aims to report back findings from the wider probe in the first half of next year.
Its review covers contactless payments, financial transfers and account monitoring via mobile devices, such as smartphones and tablets.
Mobile banking is soaring in popularity and more than a billion people are expected to use their mobile phones for banking services worldwide by the end of 2017 against just over 590 million in 2013, according to a recent report by Juniper Research.
Early findings from the FCA have highlighted a raft of potential risks from mobile banking, including smartphones being used for fund transfers late at night and problems with their small screens and limited keypads.
The FCA is looking at whether firms have systems in place to resolve mistakes, while it is also concerned over potential virus and security threats.
Consumers could reduce the risk of fraud by making sure they have adequate virus protection and that if they lose their phones, their details cannot easily be accessed.
IT system problems are also a worry and the FCA wants to ensure financial firms are taking steps to minimise the risk of glitches and service interruptions that could lock people out of their accounts.
The use of third parties to help with IT infrastructure is another area of particular concern and the FCA said there may be a "chain of companies involved in a customer's transaction, resulting in a greater likelihood of a problem occurring".
Clive Adamson, director of supervision at the FCA, said: "Mobile banking is an exciting development in financial services, with increasing numbers of consumers attracted to the convenience of banking on the move.
"With the market growing, now is the right time for us to take stock and, as part of the FCA's forward looking approach, to ensure that consumers are appropriately protected."
The FCA will test a sample of firms providing mobile banking services, including high street banks and mobile phone firms, by the end of the year as part of the wider review.
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