Data and your financial security

Data and data analytics are reshaping countless industries and organisations and have already made a big impact on how financial institutions serve their customers, particularly when it comes to security. It may seem contradictory that what could be interpreted as a limit to your privacy can also keep your personal information and money safe. But the more your bank knows about you, your spending habits and the way you interact with its services, the more easily it can detect suspicious behaviour and determine whether or not you’ve become a victim of identity theft or fraud.

We generate lots of data on a daily basis. All of our online actions are tracked, recorded and analysed – every Google search term used and YouTube video watched, every click, every scroll, every like and every share. This data, in its raw form, is useless. But, when processed and structured, it becomes a treasure trove with numerous applications to a broad range of fields like retail, health care, research and security.

In the realm of banking, data is captured any time we interact with our financial institutions, digitally, by logging into our online banking accounts, checking account balances or transferring money, for example. Use your credit or debit card to buy groceries and, in just one swipe, your bank can determine how money much you’ve spent, the name of the grocery store you visited and its location, and the date and time of your purchase.

This data can give your bank a pretty accurate picture of not just your financial life, but also your daily habits. Your bank probably knows if you stop at Starbucks for your morning coffee, if you spend your Saturdays at the mall, where your favourite after work hangout is and how often you frequent it. This may seem like a lot more detail than your bank needs to know, but let’s look at it from a security perspective.

The better your chosen financial institution knows you and your habits, the easier it can be to determine the type of behaviour that is normal for you and distinguish any abnormal activity on your accounts. Such real-time monitoring allows the bank to raise flags and take the necessary precautions, immediately, if suspicious behaviour is detected, thereby keeping you and your account safer.

For example, if you’ve ever tried to sign in to your online banking account using a particular device for the first time, you may have had to endure a few extra identity verification steps – a passcode may have been emailed to you, or sent to your phone via text message. Plug it into the sign-in page and you’re in. Or, you may have been directed to a page asking you to answer a question that only you can. Supply the right answer and, only then will you gain access. This method of identity verification is called “multi-factor identification” and it is just one of the added security measures that financial institutions have put in place to keep your money and personal information safe.

Another way data keeps us safe is by enabling the bank’s system to detect your preferred mode of making payments. Maybe you may prefer to use cash, rather than your bank card, your bank would know this because of your account activity. But let’s say, on one particular occasion, a significantly large purchase is made using your credit card, at an unusual location. Your bank will likely try to contact you to query the transaction and, if they can’t reach you, will likely block the transaction until you confirm that it’s legitimate.

For financial institutions, security risks loom large so it’s vital for us to employ the latest and most robust technology to combat and eliminate those threats. The insights gained through data have vastly strengthened banking security, allowing financial institutions to better protect our customers. Have you noticed any security applications of data in your interactions with your bank? Let me know your thoughts on data and safety in the comments below.