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Mobile banking takes a hit on road to broader adoption

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Mobile banking is becoming increasingly popular with consumers and financial services firms alike. A recent UK survey conducted by Fujitsu of 50 CIOs from across the wholesale, investment and retail banking industry found that mobile is now seen as a top business priority.

While online banking is commonplace and widely accepted by consumers, mobile banking still retains that touch of uncertainty that only time and education will gradually dispel.

Chief among any online service is the need for reassurance that customers' funds are secure, and news that the giant NatWest banking group had hurriedly withdrawn its mobile banking service following reports of fraud is particularly damaging.

The bank, which had only launched its Get Cash mobile app a few months ago, then announced that the service was suspended for a planned update, and would be reintroduced soon.

NatWest has since admitted the situation is more serious and that its customers are being targeted with "phishing" attacks to gain access to the Get Cash service. The bank confirmed that the app is being disabled while it looks to increase the level of security within its mobile banking services.

However, it seems that fraudsters were using the system to steal money from victims' accounts, with one claiming that nearly £1,000 had been removed from his account using a security code provided by a NatWest app.

The details of this particular case are more complicated than I have outlined, as might be expected, but the end result is that the bank is refunding the money as a goodwill gesture, but denying any fault.

While it seems that the Get Cash app wasn't hacked, the service was used by criminals to gain illegal entry into a customer's account. In the above case the individual hadn't even signed up to use the service--but such is the multifaceted nature of mobile banking.

Putting the complexities of this fraud to one side, the case received prominent coverage in the UK media, and will have undoubtedly worried existing mobile banking users and those preparing to make their first steps into mobile banking.

In its defence, the financial services industry will highlight that may elements of the mobile banking model are outside its control, namely the wireless infrastructure, third-party app developer and consumer behaviour.

However, I think banking customers will still blame their banks when something goes wrong, and a wider recognition of their responsibilities is needed, encompassing better fraud analytics, improved verification and device identification using fingerprinting.--Paul