In the last few years, mobile banking has exploded. Not long ago, the idea of managing your mortgage or stocks and shares via a smartphone would have seemed outlandish. But now, it’s pretty much routine.

The latest statistics show that around 60 million Americans have embraced mobile banking. That’s a massive chunk of the nation’s smartphone users, and it’s making life more convenient than ever before.

However, is there a dark side to banking with your smartphone? Could it hold unseen dangers that are putting your finances, or even your personal identity, at risk?

This blog will assess how risky mobile banking is, and suggest some ways for customers to minimize the dangers.

Is mobile banking a dangerous activity?

It all seems so simple. With a few simple taps, you can use your phone to access a huge range of financial services.

But banking on your smartphone is much more complex than it looks, and that’s where the danger lies. Take these threats, for example:

1. Smartphone malware infestation

In some cases, smartphones themselves are the major vulnerability. Both Android and iOS devices are susceptible to malware infections.

This malware can linger on your device, waiting for the moment when you enter your payment details. After that, those details could be transmitted to criminals anywhere in the world.

Mobile malware can often be tricky to remove, and it’s surprisingly easy to contract. Sometimes, a single app download can do the trick. It’s even possible to infect Android phones via a single text message.

In one of the most sinister malware agents yet discovered, attackers actually created fake banking tools which posed as authentication gateways, fooling account holders into directly sending their login details.

And don’t assume you know how to tell the real thing from imitations. Modern phishers are experts at creating believable apps, and anyone can fall victim to their work.

2. Data leaks from banks and other companies

In other cases, mobile banking is compromised by lax security practices by companies that hold your account information.

When you use mobile phones to make purchases, the company you are dealing with needs to know your account details to authenticate your payments. And customers have to trust that each company they shop or bank with has the security in place to keep those details safe.

Unfortunately, that’s not always the case. Huge companies like Yahoo or British Airways have lost millions of customer records to hackers.

More importantly, global banks aren’t immune. In 2018, HSBC announced a huge leak of customer credentials – the information which allows hackers to pose as bank customers when extracting account details.

So when you bank with your phone, you rely on others to keep your payments safe and sound. And that’s not guaranteed.

3. Poor smartphone security

Malware and data breaches aren’t always things you can control. However, ensuring that you surf the web safely with your smartphone is very much within your power, and it’s an area where people using mobile banking often fall down.

Whenever you bank remotely, you should do so over 100% secure connections. You don’t want to transmit account details over networks that are vulnerable to hackers under any circumstances.

Unfortunately, that’s exactly what millions of people are doing this very moment.

A considerable proportion of public wifi networks are unsecured, meaning that almost anyone can hijack their routers or interpose themselves between the user and the network router. This could be at your local coffee shop or an airport. Either way, it presents enormous risks for mobile banking.

If you bank via unsecured wifi, don’t be surprised to become a victim of fraud. It’s not safe, and the dangers can be mitigated via tools like VPNs, so why take the risk?

How can you reduce the risks of mobile banking?

As we’ve seen, banking on your smartphone isn’t a risk-free activity. In fact, it can be very hazardous indeed. So what can you do in response? Do you have to stop using your phone to bank and make payments? Not at all. You just need to boost your smartphone security.

Let’s think about a few easy ways to do so.

1. Use a reliable VPN

The first thing you should do is add a good Virtual Private Network to your security setup.

VPNs work by encrypting the data you send and anonymizing your IP address. If your data is encrypted, even if it does fall into the wrong hands, they won’t be able to do much with it.

You should always engage a VPN before logging onto public wifi networks, especially if you intend to then log into your online banking account. It’s just good smartphone practice.

But before you download the first VPN you find – beware. Not all smartphone VPNs apply the same level of protection. Some even feature malware, which compromises your device. That’s why we advise choosing one from our lists of best Android VPNs and best iOS VPNs.

2. Find a strong smartphone antivirus package

Secondly, you’ll want to combine VPN protection with a reliable antivirus (and anti-malware) app. As we noted earlier, malware is a common tool used by hackers to target unwitting mobile bankers. So you need to be protected as much as possible.

Vendors like BitDefender, Avast, and Kaspersky have all come up with Android antivirus apps which consume relatively few system resources and offer comprehensive inoculation.

And remember to update your chosen package regularly. Hackers are constantly seeking new ways to work around mobile banking safeguards. In that situation, and out of date antivirus package is as bad as having no protection at all.

3. Avoid banking on public wifi networks

This one is sadly a no-brainer if you want to be 100% secure. Although adding VPNs and antivirus make using mobile banking apps on public wifi a lot safer, you still won’t be able to eradicate the risks completely.

To be completely secure, try to access your banking portal at home or behind work firewalls, and resist the temptation to do so with a latte at your favorite coffee shop.

This is particularly important if your bank doesn’t offer a specialist app for banking on your smartphone. In these cases, you may be able to bank online via a web portal. But this is much less secure than dedicated apps, and it’s just not a great idea to access these kinds of portals when you are out and about.

Should you abandon mobile banking altogether?

Paying for purchases and banking on your phone have made life easier – there’s no doubt about that. For many of us, being able to access our financial institutions whenever and wherever we like is an essential tool, and we can’t live without it.

That’s fine, and as we’ve seen, there are ways to do so safely. But just keep in mind that mobile banking comes with risks – even when the banks use proper HTTPS.

From a reliable VPN to antivirus and discipline when using public wifi, solutions aren’t hard to implement. And with dire outcomes when hackers access our bank accounts, why not take the time to tighten up your mobile banking setup?