Wireless E-Banking

Wireless banking is a delivery channel that can extend the reach and enhance the convenience of Internet banking products and services. Wireless banking occurs when customers access a financial institution's network(s) using cellular phones, pagers, and personal digital assistants (or similar devices) through telecommunication companies' wireless networks. Wireless banking services in the United States typically supplement a financial institution's e-banking products and services.

Wireless devices have limitations that increase the security risks of wireless-based transactions and that may adversely affect customer acceptance rates. Device limitations include reduced processing speeds, limited battery life, smaller screen sizes, different data entry formats, and limited capabilities to transfer stored records. These limitations combine to make the most recognized Internet language, Hypertext Markup Language (HTML), ineffective for delivering content to wireless devices. Wireless Markup Language (WML) has emerged as one of a few common language standards for developing wireless device content. Wireless Application Protocol (WAP) has emerged as a data transmission standard to deliver WML content.

Manufacturers of wireless devices are working to improve device usability and to take advantage of enhanced "third-generation" (3G) services. Device improvements are anticipated to include bigger screens, color displays, voice recognition applications, location identification technology (e.g., Federal Communications Commission (FCC) Enhanced 911), and increased battery capacity. These improvements are geared towards increasing customer acceptance and usage. Increased communication speeds and improvements in devices during the next few years should lead to continued increases in wireless subscriptions.

As institutions begin to offer wireless banking services to customers, they should consider the risks and necessary risk management controls to address security, authentication, and compliance issues. Some of the unique risk factors associated with wireless banking that may increase a financial institution's strategic, transaction, reputation, and compliance risks are discussed in appendix E.


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