Over the past year, a handful of banks have begun providing extra security measures to protect their customers' online banking activities (Wells Fargo and HSBC are two prominent examples). In a twist on this theme, $484 million-asset community bank Kirkpatrick Bank, Edmond, Okla., is distributing to customers a card data encryption device and providing training to protect them from fraud as they make purchases online -- just in time for the busiest online shopping season of the year.
The driver for this project was that the bank has seen a 40% increase in check card fraud this year, and 80% of that is occurring online. "We've been brainstorming and looking into technology to find out what we can do to prevent this fraud and losses to our customers as well as to the bank," says Robert D. Banks, vice president and chief operations officer, who spoke to Bank Systems & Technology in an interview yesterday.
Banks came across SmartSwipe, a card data encryption device from NetSecure, purchased one, tested it, and decided to offer it to customers at cost ($50; $60 to non-customers) at all Kirkpatrick Bank locations and through its website. Customers plug the device into a USB port on their computer and download SmartSwipe software. When they make a purchase, they swipe their credit or debit card through the device instead of having to type in their card number and expiration date. The device encrypts the card information and warns the customer if the security certificate of the website he or she is buying from has expired. The bank did not have to install anything to support this.
"We think this could help our customers to prevent their information from being stolen online," Banks says. "They may have software that they've downloaded to prevent malware or keyloggers from getting on their computers, but such measures are not foolproof. We had a fraud seminar on Tuesday and one customer said her computer was moving slowly; she had it looked at discovered she had more than 200 viruses on her computer. And she has software to prevent that. We're hoping with SmartSwipe, fraudsters won't be able to get our customers' information. We want to get it in as many of our check card customers' hands as we can."
Kirkpatrick also recently contracted with its check card processor, TransFund, to purchase the company's FraudWatch Plus service, which monitors customer activity. "If they make a purchase overseas or in a state from which they generally don't make transactions, it will kick out a fraud alert and we'll call the customer and ask them if they performed the transaction," he says. "If they didn't, we can shut the card down. Anything we can do to prevent fraud from continuing to occur, we will try to do," Banks says.
The bank's next steps toward protecting customers from online fraud will involve more training. "Our customers are accepting of information we can give them and face-to-face training," Banks says. "We plan to offer more fraud training for our customers and more correspondence with customers through email." Early next year, the bank will roll out a new, more secure online banking site, followed by a mobile banking rollout 60-90 days later.