Are online banks safe? 6 security tips for banking online
Aug. 2, 2023
4 min read
What we'll cover
How online banks differ from traditional banks
Online banking safety precautions
How to stay safe when using online banking
With cyberattacks on the rise, concerns about the safety of online banking are top of mind. In fact, millennials now list data security as a top reason for switching banks.
Are online banks safe? As the executive director of enterprise fraud, security and investigations here at Ally, I can shed some light on the topic. Online banks take numerous precautions every day to help you stay safe. Plus, there are steps you can take to help bolster your online safety. Read on to learn more about how we work to keep our customers safe, as well as tips on how to keep your financial identity secure.
First, what is an online bank?
Online banks — also known as virtual banks and internet banks — operate primarily online without physical branches. While you won’t meet a teller or banker face-to-face as a customer of an online bank, you can access and manage your account anywhere, at any time, with your mobile device or computer.
Compared to their traditional counterparts, online banks typically offer more advanced tools, apps and features that help you manage your money on the go. And because they have lower overhead (like no physical branches), they tend to offer higher interest rates and charge lower fees than brick-and-mortar banks.
Are online banks safe to use?
We’ve all read about hackers and data breaches in the news. These highly publicized cyberattacks may have you concerned about the safety and security of online banking. It’s true that hackers attack banks, but it’s a myth that online banking isn’t as safe as traditional methods of banking.
How could both things be true? This new reality of cybercrime has required many banks to implement the latest in advanced technology to combat fraud and scammers on a whole new level — meaning banking online doesn’t necessarily increase your financial risk.
Since online banks are primarily virtually based, they offer cutting-edge technologies like automatic fraud detection, AI-driven security and digital encryption that enhance their safety. Your participation is also key in avoiding financial fraud. Being vigilant and street-smart about how you communicate with your bank and protect your personal information can have a great impact on reducing risk during your digital banking experience.
How to stay safe while banking online
Online banking is generally very safe, but you can further protect yourself — and your finances — with these cybersecurity best practices:
1. Choose your online network wisely.
Hackers exploit the vulnerabilities of public Wi-Fi. If you’re on a shared network (like at a coffee shop, library or gym), your information is in more jeopardy than using your home network. That’s because most of these Wi-Fi networks lack necessary security measures, have poor router configurations and typically have weak passwords.
It’s best to avoid online banking or conducting any other activity that involves sensitive data over public Wi-Fi. If you’re out and about, use your cellular network instead to access your online banking account. It’s not fail-safe, but it’s much more secure.
2. Use trusted websites to access your online banking accounts.
In addition to checking your network, make sure you’re accessing your banking accounts through a secure browser. If it feels off, trust your gut and wait to log in to your financial accounts.
Cybersecurity is an essential element of any modern financial institution. Governmental agencies like the Federal Deposit Insurance Corporation (FDIC) have available resources to help you research your potential bank so you can better understand its security measures.
3. Build strong passwords.
The temptation to repeat passwords or keep them simple is there, but don’t get complacent when the security of your financial information is on the line. Create complex, unique passwords to provide another layer of protection for your funds. And always secure your device and applications with a complex key code.
If it’s not already there by default, elect for additional authentication. Most online banks like Ally Bank have two-step or two-factor authentication built into their security solutions, but it’s still smart to enable multi-factor verification in other apps where this feature is optional.
And be sure to keep your authentication codes secure. Consider opting for push notifications in your apps when you can, as this is the most secure option. Otherwise, SMS (text) provides better security than email for most people.
5. Don't respond to suspicious emails, texts or phone calls.
Bank accounts are a common target for cybercriminals. Whether it’s via email or phone, many customers across the industry are victimized every day by fraudsters pretending to be associated with a bank. Some can even spoof the bank’s phone number, so it looks like you’re getting a legitimate call. It’s a scary thought, but don’t panic, there are ways to protect yourself. And remember, if you see something, say something.
Most banks, including Ally Bank, allow you to set up suspicious activity alerts online or through their mobile app. In the unlikely event a fraudster gains access to your online accounts, you will receive an alert via email or text informing you about any questionable transactions, including large withdrawals, account closures and fishy login attempts.
Is Ally Bank safe?
Keeping your accounts and personal information secure is a top priority for Ally Bank — especially for those of us on the fraud and security teams. Our approach protects you with a layered strategy that is constantly updated to protect customers from the latest threats.
At Ally Bank, we guarantee that you will not be liable for any unauthorized online or mobile banking transaction as long as you report it to us within 60 days from when your statement is made available. Check out our online bank account options.
Jeff Kearney, CFE, CAMS, is the executive director of enterprise fraud, security and investigations at Ally, responsible for leading the company’s approach to fraud-fighting and prevention. Jeff works to create partnerships with teams across Ally as well as external vendors and law enforcement in order to stay vigilant and current on all fraud and security matters. Jeff has a long background in fraud and security, previously holding the position of chief security officer at GMAC Insurance.