by
Aysu Atabey
ARW 4195 Principles of Academic Research
Michele Le Roux
10 December 2015
Words: 1,897 (Excluding Bibliography)
Context
As a student of international business management, the issue of cyber-security is important at a time when organizations are using internet a critical internationalization tool. I am attracted to the idea thatthe internet technology proliferation has become a source of business opportunity as well as risk especially in the Banking sector. Most banking organizations have pushed their business online as one of their strategies to push their business to the international market. However, the evolution of internet technology has come along with the financial insecurity especially in online transactions. Many banking organizations have received complaints from their customers regarding loss of money from cyber-thieves. Hence, many bank organizations have lost a large portion of their revenue to cybercrime reducing their competiveness in this industry. In addition, the organizations lose their customers who feel that they do not get enough security of their money in these organizations. The purpose of this research is to investigate the major predisposing factors of cybercrime, and provide possible ways of securing the finances under their care.
This topic remains relevant as long as both customers and organization continue to experience financial loss in instances of identity theft. Statistics indicate that the number of cases of identity fraud increased in the recent past (Ryckman, 2012). In 2010 and 2012, the UK banking industry has registered a loss of 80 and 101.3 UK pounds, which marks an increase of about 27% in financial loss (Financial Fraud Action UK, 2103). As more customers complain about the loss of their monies, victim organizations continue to experience loss both in terms of money as well the outflow of customers. Consequently, this has become a great business risk that requires immediate attention if banking organizations have to run profitably.
This research seeks to answer the question what are the number of factors that predispose banking organizations to the risk of identity theft. The answer to this question will help in the design of strategies to reduce the cases of identity theft that have undermined business in the banking industry. The primary purpose of this study isto investigate the factors that predispose the UK banking organizations to the risk of identity theft (Wall, 2007). Secondly, the research will develop strategies to mitigate these business risks to help banking organizations to avoid financial loss. The research will be based on the literature that has been published online in the last ten years to identify the intensity of the problem. The limitations of this research lie on its dependence on secondary data rather than statistical data.
Literature Review
In the recent past, identity theft has become a sensitive topic in the global online business. In the 21st century, most organizations have developed an online business strategy in which they have provided mechanisms through which customers can access their services online from their remote location. Today, it is possible for a consumer to withdraw money, buy airtime, order products, and pay them online through smartcard technology. This technology has become necessary as companies seek to develop a strong online presence to target more customers across the globe (Hoffman& McGinley, 2010). Specifically, the banking organizations have launched their online transactions to allow customers to transact their business online. Online money transfer, online purchase, and e-purchase are all transactions that involve online banking services.
Finklea (2014) defined identity theft as the unauthorized use of personal credentials with the aim of stealing from them. Cybercriminalsfind strategies to access bank customer details that they use transact with while pretending to be the owners of such information. The criminalspossess expert knowledge and experience in the online trade, which gives them an upper hand in tapping details such as account numbers and age, which are essential in completing bank transactions (Krebs, 2009).
In UK banking sector, there has been an upward trend of identity theft in the banking sector. In the UK banking industry, there was a 27% increase in financial loss between 2011 and 2012 as a consequence of the escalation of identity theft (Financial Fraud Action UK, 2103). The statistical projections indicate that the financial loss due to identity theft is expected to increase unless effective risk management strategies are launched to mitigate the problem. Risk management is an important subject for strategic managers as it is involved with the identification of business risks and strategizing on the best approaches to curb the problems. Identity theft poses business organization to the risk of losing their revenue and having a massive outflow of customers. This would be a great business loss that can lead to the failure of predisposed organizations in this industry.
In the recent past, the identity theft has become a crucial topic in the field of research. Most scholars have set out to investigate the causes of identity theft and the possible ways in which this can be minimized. Paget (2009, p. 7) found out that wireless network vulnerability, malicious scripts, data stealing, loss of personal electronic gadgets and smart cards as some of the causes of identity theft. The conclusion that was drawn here is that the clients are exposed to data loss which often leads to the loss of critical information that can be used for fraud. For instance, some customers will keep their ATM PIN in the wallet and when they accidentally lose it, it is possible for another person to withdraw money from the bank. Saget (2009) provided a mitigation approach that is customer centered and seems to have ignored the role of the banking management in developing a preventive strategy.
There has been a controversy as whether the problem of identity theft should be looked from the customer end or from the bank management end. A research by Global technology services (2012) show that the banking management should be the one to develop a strategy to curb the instances of cybercrime that is on the rise. The argument of this team is that the ignorance of the customers cannot be regarded as an excuse for failure of the banking industry as the banking organization are accorded the mandate to provide protected services for their customers. While some researchers feel that the customer end is the reason for increased cybercrime, other feel that it is the banking managers role to protect the customers and not vice versa.
A broad range of research shows that the customers are to blame for the misplacement of their confidential information. Equifax (2015) stated that the cases of impersonation have increased by 163% in the last 20 years. Impersonation refers to incidence where a fraudster acquires a person’s information and uses it to conduct bank transactions. The implication is that the bank customers have been careless by exposing personal information to untrusted persons. However, there is need to assess how such information leaks out and whether it occurs from the customers end or organizations end. Recent research by Smith (2014) shows that there are many avenues where the identity thieves can access information. Smith noted that non-monetary organizations have contributed to the exposure of public information. For instance, health institutions have shown minimal concern for protecting patient private information while transacting with them. This means that such organizations are putting the clients at a vulnerable position. Besides, the clients have little knowledge about the sensitivity of the bank credentials, which the subjects have exploited. The suggestion of various researches is that the best way to solve the client-end problems is to provide adequate training that will help them to protect themselves from the fraudsters. From this perspective, there is evidence that more scholars have reported that the buck stops with the institutions that are in the highest risk of losing their customers.
On the other hand, the banks have taken blame for failing to protect the customers. In the last three months of 2015, the UK banking industry reported a 30% increase of online cybercrime instances, in which experienced fraudsters personified to open accounts and transact using fake identities (Protecting Patient Identity, 2015). In such an instance, there is evidence that the customers cannot take blame is some instances especially where the knowledge used goes beyond their ability. The organizations have the experts who internet-proficient and have the ability to shun such actions. For instance, the bank should be able to detect fake identities and transactions by engaging high-level authentication procedures. Besides, research has shown that incidences when the thieves use ATM cards to withdraw money have become more common. This means that organizations are failing to seek proper identification when such transactions occur. On this ground, it is possible to blame the organizations for failing the customers. Besides, the recent laws are placing the organizations at a strategic position in the war against cybercrime. The organization will be held liable for failing to protect their customers from such fraudster activities. From such an angle, it is indisputable that although the clients have a stake in the issue, the banking industry has played an important role in failing to enact adequate security measures.
In this light, there is a deficit of research that provides an integrative approach that can combine the efforts of the customers and the management team to minimize the problem of identity theft that puts both the customers and the banking systems at the risk of financial loss (BITS, 2003). This research uses an integrative approach to identify the predisposing factors from both the customer and the management that put the industry at the risk of losing their money. Therefore, the research will provide a strategy through which all the stakeholders in the banking industry can take part in impacting financial security in the banking industry.
Position Statement
From a close evaluation of the literature that exists today, there is evidence that the problem of cybercrime is a two way issue that can only be addressed using an integrative approach. While there is evidence that the society has become the main target of the crimes, there is evidence that the clients have a low ability to handle these experts. Secondly, the customers are by nature vulnerable due to their low level of understanding regarding the internet technology. From this perspective, the organizations have the expert knowledge, or at least the ability to acquire it, which means that they can handle security issues at their end. The implication is that while the customers have a role to play in ensuring that their private information is safe, the organization has a greater responsibility to educate the customers on the important of protective measures. Besides, the organizations will suffer consequences for failing to protect their customers as mandate by law (Mary, Jeffrey, and Matthew, 2013). Losing customer loyalty will impact on the viability of the banking industry. However, it is reasonable that customers and the banking sector work hand in hand in the war against cyber-theft.
For future consideration, it is crucial that more research focuses on how other organizations have contributed to the problem by exposing information. For instance, the health facilities treat bank credentials with little concern for security. This means that this is a loophole that will later escalate the problem. On this ground, research in this direction will engage more stakeholders, which will be paramount in attaining the lowest possible levels of cybercrime.
Bibliography
Bits, 2003.A Publication Of The Bits Fraud Reduction Steering Committee.Financial Services Roundtable. Available From :<Http://Www.Bits.Org/Publications/Security/ Bitsidtheftwp0503.Pdf >
Equifax, 2015, Identity Fraud Facts And Statistics. Available From :<Http://Www.Equifax.Co.Uk/Products/Learning-Centre/Facts-And-Statistics.Html>
Financial Fraud Action Uk, 2013. Fraud The Facts 2013: The Definitive Overview Of Payment Industry Fraud And Measures To Prevent It. Available From :<Http: //Www. Theukcardsassociation.Org.Uk/Wm_Documents/3533%20fraud%20the%20facts%20final.Pdf>
Finklea, K. 2014. Identity Theft: Trends And Issues. Congressional Research Service. Available From: <Http://Www.Fas.Org/Sgp/Crs/Misc/R40599.Pdf >
Global Technology Services, 2009.Reputational Risk And It In The Banking Industry. Available From:<Http://Public.Dhe.Ibm.Com/Common/Ssi/Ecm/En/Rlw03010 Usen/Rlw03010usen.Pdf >
Hoffman, S. K., & Mcginley, T. G. 2010.Identity Theft: A Reference Handbook. Santa Barbara, Calif: Abc-Clio
Krebs, B., 2009. “European Cyber-Gangs Target Small U.S. Firms, Group Says,” Washington Post.
Mary, E, Jeffrey B., K, & Matthew W., E 2013, ‘Beware Red Flags: The Sec’s And Cftc’s Identity Theft Red Flags Rules’, Investment Lawyer, 20, 9, Pp. 3-8, Business Source Complete, Ebscohost, Viewed 7 November 2015.
Paget, F., 2012. Financial Fraud And Internet Banking: Threat And Countermeasures. Available From: <Http://Www.Mcafee.Com/Uk/Resources/Reports/Rp-Financial-Fraud-Int-Banking.Pdf>
‘Protecting Patient Identity. (Cover Story)’ 2015, Health Care Registration: The Newsletter For Health Care Registration Professionals, 24, 10, Pp. 1-12, Business Source Complete, Ebscohost, Viewed 7 November 2015.
Ryckman, P., 2012. “Owners May Not Be Covered When Hackers Wipe Out A Business Bank Account, The New York Times.
Smith, Ak 2014, ‘They Are Watching You’, Kiplinger’s Personal Finance, 68, 5, Pp. 46-51, Business Source Complete, Ebscohost, Viewed 7 November 2015.
Wall, D. 2007. Cybercrime: The Transformation Of Crime In The Information Age. Cambridge: Polity.
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