--- begin forwarded text From: [EMAIL PROTECTED] Date: Wed, 04 Aug 1999 11:10:49 -0500 To: [EMAIL PROTECTED] Subject: IP: Security of on-line banking studied Cc: [EMAIL PROTECTED] Sender: $[EMAIL PROTECTED] Reply-To: [EMAIL PROTECTED] Source: Washington Times http://www.WashTimes.com/business/business2.html Security of on-line banking studied By Julie Hyman THE WASHINGTON TIMES Congressional investigators said yesterday that the 6 million Americans who bank on line may be getting convenience at the expense of security. According to the General Accounting Office, 44 percent of banks, thrifts and credit unions it surveyed have not enacted strict enough measures to keep their computer systems safe from hackers. The report was released at a hearing of the House banking subcommittee on monetary policy. Lawmakers shied away from suggesting regulation as a solution to on-line banking security, but said both banks and consumers must address the risks. "We don't want to overregulate the activity to the point that we unduly dampen it or retard its growth," said Rep. Spencer Bachus, Alabama Republican. "At the same time, the public has the right to safety and soundness in Internet banking, so we can't walk away from it." Consumers who bank over the Internet use Web sites to transfer money between accounts, pay bills, check account or investment balances and apply for loans. The GAO report concluded that Internet banking is by nature riskier than conventional banking. Its review of banking regulators' examinations of 81 financial institutions found that 35 of them, about 44 percent, hadn't taken all the risk-limiting steps regulators have said are needed. Mr. Bachus said Internet banking is projected to grow 20 to 25 percent by 2004, making it necessary to be vigilant about hackers. "All the banking representatives agreed that we need to prosecute [hackers who break into on-line accounts] and we need to publicize it." He noted that the hearing was just the first stage in a congressional look at on-line banking that could help increase Internet security before consumer use explodes. The study also said that in some cases, on-line banking operations were begun at companies without the approval of boards of directors or chief executive officers. If problems arise, the report cautions, senior management will not have the foreknowledge to deal with them. The banking community is responding to the challenges of on-line banking. The Financial Services Roundtable, a District of Columbia trade group, formed a technology division in 1996 to foster the development of Internet banking and to test electronic-security measures. But Catherine A. Allen, the division's CEO, said banks alone cannot ensure security. "We would like to emphasize that security is a shared activity," she said at the hearing. Consumers should be aware of risk, and should choose on-line banks that are insured by the Federal Deposit Insurance Corporation, she said. John Hall, an American Bankers Association spokesman, said that the bottom line of banking, whether it be on-line or the more traditional, in-person fashion, is trust. "The banks' No. 1 attribute they sell is trust. Their customers have to feel completely comfortable that they are secure." For that reason, he said, the banking industry is vigorously pursuing security measures. Even with the explosive growth of electronic commerce and on-line investing, most consumers are still somewhat hesitant about conducting financial transactions on the Internet, and even more so when it comes to managing their finances. According to a June report by investment firm Goldman Sachs, only about 4 percent of U.S. households currently use on-line banking products. This article is based in part on wire service reports. Copyright © 1999 News World Communications, Inc. ********************************************** To subscribe or unsubscribe, email: [EMAIL PROTECTED] with the message: (un)subscribe ignition-point email@address ********************************************** <www.telepath.com/believer> ********************************************** --- end forwarded text ----------------- Robert A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
