The Financial Conduct Authority has launched a review of mobile banking,
warning that banks need to ensure they have the right IT systems in place and
are protecting customers from fraud, as the UK’s mobile banking market
continues to grow.

The full review will be published in the first half of 2014, taking a closer look at mobile
banking, which includes contactless payments, financial transfers and account
monitoring via mobile devices such as smartphones and tablets. This way, the watchdog aims to gain a
better understanding of the measures currently in place as banks develop new
products aimed at mobile devices.

Smartphones and tablets are viewed as increasingly important platforms for the delivery of banking
services, with many banks having already developed mobile banking apps.
Interest has also increased around mobile payments, with recent research from
the UK Payments Council forecasting that the number of mobile transactions made
in the UK will grow from 356 million in 2012 to around 1.5 billion in 2022.

However, as mobile payments and banking continue to gain popularity, the FCA warns that
the banks delivering mobile services need to ensure they have “robust” systems
and technology in place to ensure customers are protected. 

For example, the report mentions that with firms under commercial pressure to
launch products quickly, products and services could be released without
sufficient testing. This could impact on the public's willingness to use mobile
services, if not addressed.

"There is a risk that an IT failure could interrupt services, preventing access to
mobile banking, limiting customers’ access to their money and undermining
consumer confidence in these services," the report stated.

As
such, the FCA has set out
areas of potential risk, which banks should be paying particular attention to.
These include fraud, security issues such as malware and viruses, technology
risks and interruption to service, consumer awareness and last but not least, anti-money
laundering systems and controls.

The
regulator added that malware being delivered through mobile apps is an
"important risk" for firms to consider, highlighting problems
around financial loss as well as the potential to undermine consumer
confidence in mobile banking.

"Mobile
banking is an exciting development in financial services, with increasing numbers of consumers attracted to the convenience of banking on the move. With
the market growing, now is the right time for us to take stock and, as part of
the FCA's forward-looking approach, to ensure that consumers are appropriately
protected," said Clive Adamson,
director of supervision at the FCA.

"By
publishing these initial thoughts we want to make sure that the industry knows
exactly what we’re looking into, and consumers have a clearer idea of some of
the potential risks," he added.