Traditional banks will struggle to secure mobile transactions in 2015 - report

In their recently released research paper titled “Impact of mPayments security on profits, reputation and customer loyalty”, the company highlights existing banking IT infrastructures as a key hindrance to the effective implementation of mobile-focused security solutions. This outcome is seen as a direct result of over reliance by these financial institutions on aging and complex legacy systems.

The growth of mobile payments in Western Europe has been spurred by increasing consumer reliance on mobile devices and the convenience they provide, aiding the speedy access to information and tools to aid completion of necessary tasks, anytime and anywhere. As financial institutions refocus efforts to leverage opportunities presented via the mobile channel, Omlis believe that many of these institutions are still heavily reliant on their brand reputation. The report also turns the spotlight on issues of complacency within financial organizations and their dependence on outdated encryption solutions developed for old IT infrastructures. This leaves institutions ill-equipped to face new, evolving mobile fraud threats and growing competition from digital banking challengers using IT to shake up retail banking, the report points out.

The study also mentions that according to a survey of 2000 people by Fiserv, over 80% would trust a bank with the right technology in place. 56% said that a new bank would have a competitive advantage if its IT was reliable. Infrastructure failures experienced by financial institutions including Sainsbury’s Bank and RBS within the past two years could be seen by many as evidence of the traditional legacy systems becoming increasingly unsustainable for modern banking.

Examples of disruptive digital banks include Metro Bank and Atom Bank in the UK, Fidor Bank in Germany and Netherlands-based KNAB, the report suggests.

Omlis believe that the ability for European-based financial institutions to reduce security liabilities and increase the versatility of their customer offering depends on the seamless interaction between multiple differing systems and applications. As mobile focused consumers increasingly base their loyalty on complete mobile transaction security, financial institutions are faced with the stark reality that exposes existing infrastructures as less than adequate in sustaining customer loyalty.