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Bank of America issued a press release saying that it went live today in Tennessee with its OBR Best-of-the-Web-winning multi-factor authentication system. However, a search of the bank's website, using Tennessee as our state, found no mention other than the "coming soon" paragraph that's been posted for the past several weeks (click on inset to read).
–JB
U.S. Bank, with more than 1 million online banking customers, just went live with CheckFree’s latest bill payment system (see OBR 113, p. 11). The improvements were communicated to current customers via a splashscreen the first time they went into the bill payment system (click on the inset above for a close-up).
The changes were also highlighted on a splashscreen after online banking login (see inset below). Customers also received a letter with similar information.
Improvements
Analysis
The reason for this article is to highlight the effectiveness of splashscreens for communicating important new information. PayPal has been using this technique 
practically since inception and we’ve commented on it a number of times in Online Banking Report.
We are now starting to see the technique at other financial institutions. We believe it’s an extremely effective technique for two reasons:
However, you have to be careful not to overuse it. Anything more than once per month and users will start clicking past it like they do with most advertising intrusions.
If you are not using this technique, talk to your website development team, or outside platform provider, about how to incorporate it into your online marketing mix.
—JB
Now that Visa, MasterCard, and American Express and others are actively putting so-called contactless cards into the hands of consumers (Chase’s blink for instance), it’s not such a far-fetched thought that these radio-frequency (RF) cards could be used as the extra factor for online banking login.
PCs equipped with RF card readers could read the user’s plastic, allowing the user to log in securely with just a username/password, or conceivably just a password.
But PC makers aren’t going to add card reading technology, no matter how cheap it is, just for online banking. But if merchants began insisting on the RF readers to cut down on card fraud for online purchases, perhaps with the associations agreeing that a purchase made with a PC-based RF reader qualified as a "card present" transaction, then the technology could take off.
Using contactless cards online could be more beneficial than using them for off-line purchases. In the physical world, the contactless card merely saves a few seconds compared to swiping it through a conventional terminal. But online the savings could be more dramatic, potentially allowing the customer to skip typing their card and verification number into a web forms.
—JB
With the success of ING Direct and other direct banks, there has been a lot more attention given to selling savings accounts and certificates online.
One of the new players to watch is Capital One. They are beginning to apply their marketing skills, honed in the brutal credit card market, to deposit products.
Googling "online banking" today, we noticed Capital One in first position on the right-hand sponsored links area (see inset).
Clicking through you are delivered to a page that markets deposit products much more aggressively than most banks (see screenshot below). Capital One leads with a chart showing its rate compared to the national average (see inset above).
The bank offers five different savings products on the main page, each with its own distinct Open Account button:
Analysis
The relatively high rates (APYs) are a big part of the appeal. But there is more to it than just price.
Capital One does a great job of laying out the options, including:
Click on this thumbnail for a look at the main savings page at Capital One.
—JB
JP Morgan Chase and Citibank led all banking and lending companies in online ad spending according to the most recent American Banker survey of financial services spending (May 2005).
Chase’s $50 million in online advertising was 21% of its entire advertising expense, the highest among major banks, and considerably above the 11% online share across all financial services companies. In comparison, Citi’s $49 million spent online was only 9% of its total advertising expense, slightly below the industry average.
NetBank, the 16th biggest online advertiser, was the percentage leader, funneling all but $100,000 of its $4.9 million in advertising into online initiatives. Two other major online advertisers spent more than half their money online last year: ING Direct spending 60% of its $40 million total online, and MBNA spending more than half its $14 million online.
Lending Tree, Quicken Loans, HSBC, Sovereign and East-West Mortgage all devoted about one-third of their advertising into the online channel.
Top-20 Financial Institutions Online Advertisers*
2004 Online Advertising (% of total advertising)*
1. JP Morgan Chase $50 million (21%)
2. Citigroup $49 million (9%)
3. American Express $28 million (9%)
4. Bank of America $25 million (9%)
5. ING Direct $24 million (60%)
6. Lending Tree $22 million (31%)
7. Ameriquest $16 million (13%)
8. Quicken Loans $10 million (33%)
9. Wells Fargo $9.2 million (14%)
10. HSBC $8.3 million (39%)
11. MBNA $7.0 million (51%)
12. Wachovia $6.3 million (7%)
13. E-Loan $6.1 million (21%)
14. NetBank $4.8 million (98%)
15. Discover $4.7 million (6%)
16. GM $3.8 million (4%)
17. Royal Bank $3.2 million (12%)
18. Sovereign $2.8 million (33%)
19. East-West Mtg. $2.7 million (32%)
20. WAMU $1.9 million (2%)
*Banking, Lending, Mortgage, or Credit Card segments only, does not include online brokerage, insurance, or investments.
If you look at the brokerage and mutual fund category, the spending accelerates. Four online brokers Ameritrade ($65 million), Scottrade ($63 million), Schwab ($58 million), and E*Trade $52 million) each outspent even the largest financial institution, and Netstock Direct ($32 million) outspent all but Citi and Chase.
Top-10 Brokerage & Mutual Funds
2004 Online Advertising (% of total advertising)
1. Ameritrade $65 (64%)
2. Scottrade $63 (87%)
3. Schwab $58 (35%)
4. E*Trade $52 (77%)
5. Netstock $32 (99%)
6. Harrisdirect $24 (78%)
7. Vanguard $12 (31%)
8. TD Bank $10 (17%)
9. Fidelity $5.3 (4%)
10. T.Rowe Price $3.8 (5%)
Download the Excel file with more details.
—JB
Today's American Banker reports that $365 million-asset Stonebridge Bank (West Chester, PA; $365 million) and American Bank (Allentown, PA; $500 million) are following E*Trade's move to offer hardware tokens to authenticate consumer logins.
As of May 30, Stonebridge is offering the token free-of-charge to any of its 4500 consumers who request one. The token will be mandatory for its 500 business customers. In its security FAQ, the bank says it will charge $25 annually, its out-of-pocket expense for the device, after the first year. They also charge $25 to disconnect the token during the first year and $25 to replace it within 5-7 business days, or $45 total for overnight delivery.
American Bank is sending the token to 1000 customers who said they would like one in a recent survey. There is no charge for the service. The bank expects to order another 1000 from RSA Security next month. It pays approximately $20 each, which does NOT include maintenance costs to operate the system.
Analysis
We applaud these three financial institutions for moving beyond the username/password. However, except for the most demanding customers, primarily businesses, hardware-based solutions are overkill.
The Bank of America/Passmark approach is much better. Not only is it more cost effective, it also much easier to use and also helps prevent the user from logging in at a fake site.
—JB
It’s fitting that the financial company most targeted in phishing attacks, Citibank, would be the first to introduce a new email format that goes a long way towards helping users identify legitimate email messages.
The personalized emails (click on inset to enlarge) include not only the name of the recipient, but also the last 4 digits of the user’s ATM card. While simple personalization with the customer name would help many users identify legitimate emails, it’s far from fool-proof.
First, there’s the relatively common practice of including first name and/or last names in email addresses. Also, some phishers are using direct marketing tactics and first running email addresses through various databases to append actual names and other info to the email record in order to develop a personalized pitch (see ZD-Net article).
Citibank’s new email format was announced to customers through a short message on the top of the online banking screen in early May. It is also now mentioned in the bank’s main FAQ page.
Analysis
This is a great first step in winning back the confidence of users. Eventually email standards will evolve so that the email client will be able to readily identify legitimate emails, but that could be years in the future.
If you are considering a similar approach, you might want to let users choose the name and identifying information that appears in the personalization box. In February, we reported on a UK security initiative that took that approach.
For more information:
— JB
Editor’s Note: Citibank received an OBR Best of the Web award for this and other security features in Online Banking Report #119, "Marketing Security."
Bank of America wins the race to be the first with a viable plan to secure consumer online banking accounts. In an announcement today, it becomes the first major U.S. bank to endorse multi-factor authentication for consumers at login.*
The system, already in use at Stanford Federal Credit Union, is called SiteKey. The clever approach from Bill Harris’s PassMark Security provides several layers of security to defeat phishing and keylogging attacks. The company calls it two-way two-factor authentication because not only does the end-user authenticate themselves to the bank, the bank authenticates itself to the user to defeat phishing schemes.
Here’s how it works (click on inset below for BofA page):
The service launches in mid-June in Tennessee with full roll-out by the end of the year.
Analysis
Even though it’s long overdue, we applaud Bank of America for moving the industry forward. While the program won’t be available system-wide until year-end, we’re giving it an Online Banking Report "Best of the Web" now because it’s the biggest development in U.S. online banking for several years.
The BofA/Passmark system is ingenious for several reasons:
If you are at one of the other 15,000 financial institutions in the United States, the clock is now ticking. As your customers find out they are not among the 13+ million consumers (BofA’s current online base) receiving extra protection, they will be demanding the same from you. And if you thought BofA was aggressive in its free bill pay promotion, wait until you see the marketing blitz on this one. Extra authentication simply MUST BE in your 2006 plans.
— JB
*For several years, ING Direct has asked for a third bit of info at login, but the necessary info is relatively easy to obtain (for example, zip code). Also, earlier this year, E*Trade launched security tokens for its high-rollers. But BofA is the first with a broad, secure, and non-hardware-based approach.
During the past year, NBC Nightly News, more than any other national show, has publicized fraud concerns in the online channel. They played a large role in publicizing the $90,000 apparent key-logging loss by a Bank of America small business customer in Florida. They also covered, rather sloppily, last summer’s flawed Gartner study about multi-billion dollar losses in identity theft.
The most recent story, which appeared on television last night, covered demand draft fraud initiated at Qchex.com among other locations. The NBC Nightly News story appears to have been based primarily on a May 24 article by MSNBC’s Bob Sullivan in his closely watched online column on ecommerce. Sullivan was also the primary source for the Gartner story.
Analysis
When NBC goes on the air pointing fingers at the banking industry’s security practices, you better be ready with a response. Your branches and customer support personnel should be briefed on the subject and be prepared to answer customer concerns. You should also prepare a response in your online service HELP/FAQ area that addresses the issue.
In the future, you might want to pay attention to Bob Sullivan’s columns. If he’s writing about it, and if it’s a new twist on an Internet scam, there’s a good chance the Nightly News will pick it up. Had you been reading his column yesterday morning at 8:15 am, you’d have had a day to prepare damage control.
As far as solving the demand draft problem, that’s something we’ll leave to the regulators. But requiring Internet originators like Qchex.com to verify account ownership before processing a debit, would be a good first start.
—JB
Although the cyberthieves have made in-roads this year, there are a number of clever low-cost authentication methods being tested. The thing they have in common, simplicity with no new hardware.
Here is a quick recap of the available techniques. Generally, these techniques would be used in addition to a username and password:
To thwart keylogging (but not phishing):
To thwart keylogging AND phishing:
For more information, refer to our previous security NetBanker security articles and Online Banking Report (#93/94).
—JB
The webinar on the innovative Upost remote deposit program has been rescheduled to May 26 at 2 PM Eastern time.
For more information, read our initial article.
— JB
Password management is a pain and only promises to get worse as banks and other ecommerce providers tighten up access controls due to sophisticated fraud attacks.
However there is one area where some banks are still "penny-wise and pound foolish." Specifically, the old-fashioned notion of locking an account after three unsuccessful password attempts.
It’s just too easy for to miss three times. Here’s what just happened to me at Bank One’s credit card site:
1. Correct username, incorrect password
2. Correct username, retype same (incorrect) password in case I made an inadvertent typo the first time (since the password is masked and I can’t see what I typed the first time)
3. Correct username, another shot at the password which turned out to be incorrect (probably because I changed it last time I was locked out)
RESULT: Locked out and in need of an account reset, which luckily you can do online if you have the card number, expiration date, 3-digit code, and primary social security number.
Analysis
The last time we took an in-depth survey, in our April 2003 report on Security & Privacy (OBR 93/94), 4 of the 14 major financial institutions we tested locked users out after just three attempts, while 6 of 14 fell within the recommended range of 5 to 10 attempts.
We recommend that you allow at least five unsuccessful logins, and preferably closer to 10, prior to freezing the account. The amount of fraud deterred between locking out at three attempts vs. locking out at six is so small as to be virtually unmeasurable. However, there is a real cost in customer service and consumer dissatisfaction for constantly requiring password resets.
OK, I feel better now. Thanks for listening.
— JB
