Security Policy Issues in Internet Banking in Malaysia

Security Policy Issues in Internet Banking in Malaysia

Normalini Md Kassim (University Science of Malaysia, Malaysia) and T. Ramayah (University Science of Malaysia, Malaysia)
DOI: 10.4018/978-1-61520-847-0.ch042
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Abstract

As a continually growing financial services of electronic commerce, Internet banking requires the development and implementation of a sound security procedure. The existing literature highlights security as the primary factor which determines the adoption of Internet banking technology. The secondary information on Internet banking development in Malaysia shows a very slow growth rate. Hence, this study aims to investigate risk and security requirements factors which influence the adoption of Internet banking application through the information collected from an interviews with managers from Bank M, Bank C and Bank P. The results reveal that the customers have great concerns for security and privacy issues in adoption of Internet banking. Hence, several methods of ensuring a more secure Internet banking was suggested like a two factor authentication and three factor authentication. For future research directions biometric techniques, such as fingerprint verification, iris or face recognition, retina analysis and hand-written signature verification are increasingly becoming basic elements of authentication and identification systems in order to be privacy-friendly, minimize the social risks and prevent misuse of biometric data.
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Internet Banking

Internet banking adoption in Malaysia is relatively low and very little research has been done to shed light on key adoption determinants. Though, electronic revolution has commenced in Malaysia but Internet banking is still in infancy stage. So, it is very difficult for the banking industry to design interventions that would enhance the diffusion of Internet banking (Ndubisi & Sinti, 2006).

While numerous studies have been undertaken to examine issues in the wider context of e-banking and customer loyalty, comprehensive research in the area of e-banking issues and customer preferences in the specific context of Malaysia has been rather limited. A study conducted examined the evolution of e-banking in Malaysia and analyzed the various electronic delivery channels such as automated teller machines (ATM), telebanking and PC banking (Balachandher, Santha, Norhazlin & Rajendra, 2000). Another study investigated the factors that affect the adoption of e-banking in Malaysia (Suganthi, Balachander & Balachandran, 2001).

Key Terms in this Chapter

Authorization: The ability to control the actions of a person or entity based on his/its identity.

Confidentiality: The ability to prevent unauthorized parties from interpreting or understanding data.

Privacy: The ability to prevent the unlawful or unethical use of information or data.

Integrity: The ability to assure that data have not been modified accidentally or by any unauthorized parties.

Phishing: A type of identity theft where criminals blast emails to a mass audience in their malicious attempt to bait you into fake websites or also knows as ‘online identity fraud’.

Authentication: The process through which an Internet merchant can be established via a trusted third party that guarantees that the merchant is indeed whom he is.

Electronic Banking: Term for the process by which a customer may perform banking transactions electronically without visiting a brick-and-mortar institution.

Internet Banking: Internet banking refers to the provision of facilities such as accessing accounts, funds transfers, and buying financial products or services via Internet (Sathye, 1999).

Biometrics Technologies: Methods for identifying a person or verifying a person’s identity based on the person’s physiological or behavioral characteristics. Physiological characteristics include fingerprints, hand geometry, and facial, voice, iris, and retinal features. The behavioral characteristics include the dynamics of signatures and keystrokes.

Non-Repudiation: Mechanisms to ensure that the client (customer) can be certain he is communicating with the genuine server (bank) or vice versa, such that neither of the communicating parties can later falsely deny that the transaction took place.

Spheres: defined as an independent entity consisting of a person, information technology or both (Hutchinson & Warren, 2003).

Perceived security: Is the “customers’ perception of the degree of protection against these threats (Yousafzai, Pallister & Foxall, 2003).

Auditability: The ability to keep an accurate record of all transactions for reconciliation purposes.

Protection: The process through which customers are satisfied that their personal information is sufficiently preserved by the entity collecting the information.

Internet: Internet is a method of communication that utilizes networked computer as a medium. Internet enables direct transformation of information from providers to customers.

Security: The context of electronic banking threats can be made either through network and data transaction attacks or through unauthorized access to the account by means of false or defective authentication.

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