Is Online Banking Safe? Security Risks and How to Prevent Them

Just like traditional brick-and-mortar financial institutions, online and mobile banking platforms have security measures in place to keep your information safe. Here are some of the most common:

• Encryption and data protection: Encryption helps ensure your data is transmitted securely online. It works by scrambling sensitive information, like your login credentials and account data, to make it unreadable to unauthorized users.
• Multi-factor authentication (MFA): MFA requires you to provide multiple forms of identity verification to prevent unauthorized access to your account. Even if someone somehow gains access to your login credentials, they won’t be able to get past the second step to access your accounts.
• Fraud detection systems: Fraud monitoring and prevention software uses algorithms and pattern recognition to identify suspicious account activity. It can often alert you instantly if it detects signs of fraud.

While the specific security protocols can vary, always look for an FDIC-insured online institution. The Federal Deposit Insurance Corporation, also known as FDIC, insures your funds up to $250,000 per depositor, per FDIC-insured bank, per ownership category.¹

Chime tip: Use the FDIC’s BankFind tool to check whether an institution is FDIC-insured or not.

Even if your financial institution has strong security measures in place, it’s smart to know about the potential risks to your accounts. Cybercriminals may use scams like phishing or malicious software (malware) to try and access your personal information. This is how accounts can get hacked, so being aware of these threats is an important step to protecting yourself.

Here are some common risks to be mindful of:

• Phishing: Phishing is a scamming technique that uses fake or fraudulent emails or messages that look legitimate to trick users into handing over their personal information.
• Malware and viruses: Malware is malicious software that can compromise your devices if your phone or computer becomes infected.
• Identity theft: If your information falls into the wrong hands, cybercriminals can use it to complete unauthorized transactions from your accounts or open fraudulent accounts in your name.
• Wi-Fi security: Wi-Fi networks play a big role in hackers’ ability to access your data. Accessing your account while using an unsecured or public Wi-Fi network can expose your data and increase the likelihood of hackers intercepting it.

Ensuring a secure online experience isn’t only up to your financial institution. The tips below cover a few easy ways you can ensure your data stays protected from online scammers.

Choose safe passwords

Your password is one of the first lines of defense when securing your personal information. You’ll want to create complex passwords using a mix of letters, numbers, and symbols, as well as random phrases that aren’t tied to personal info (like your birthday).

Make your password long – a 12-character password takes 62 trillion times longer to hack than a six-character password². And use a unique password for each of your accounts. If you have multiple bank accounts, a password manager can be a helpful tool for storing and keeping track of all your logins.

Install antivirus software

Installing antivirus software across your devices can help safeguard your data. Your phone may already have antivirus protection built in, but downloading additional software creates an added layer of security.

Look for antivirus software that bundles other security features, such as password management, firewalls, and a virtual private network (VPN).

Use multi-factor authentication (MFA)

MFA requires an additional form of verification in addition to your login credentials, providing extra security to your accounts. This additional verification could come in the form of a unique code sent to your mobile device or biometric data that requires your fingerprint.

MFA is an easy way to boost your security when banking online. Enable MFA across your accounts; you can usually do this in your account settings.

Avoid public Wi-Fi

Public Wi-Fi networks are often unsecured and may be prone to interception by hackers. While there’s less cause for concern when surfing the web in a coffee shop or browsing social media at the airport, accessing your online bank account is a different story.

Avoid logging in to your bank accounts when connected to a public Wi-Fi network. Try to connect to a secure, password-protected Wi-Fi network instead. If you must access your account on the go, opt for your phone’s cellular data to connect instead of Wi-Fi, if available.

You can also use a VPN to encrypt your Wi-Fi connection and secure your data while you’re away from home.

Opt in to bank alerts

Many financial institutions allow you to receive alerts via email or text message when your balance dips below a certain amount or if a large purchase is made. When you opt in to these alerts, you can immediately report any potential fraud, scams, or unauthorized purchases on your account.

If your online financial institution doesn’t offer account alerts (although most of them do), keep a close eye on your account activity by periodically checking your transaction history. This way, you can proactively spot any unfamiliar account activity and report it right away.

Online banking is a popular option because of its convenience. While security risks exist with any online activity, implementing simple security measures, like choosing complex passwords and not logging into your accounts on public Wi-Fi, can help avoid them.

By taking an active role in protecting your data, you can embrace the benefits of online banking while minimizing your security risks. If you bank with Chime, learn how to avoid scams that target Chime members.