How Safe Are Banking Apps, Really? (2024)

Mobile banking apps make it easier to manage your money. You can do tasks like view your account balance, deposit checks and transfer money between accounts from anywhere at any time -- no need to visit a physical branch during specific hours. But with something as sensitive as your financial information, it’s natural to wonder if you’re putting yourself at risk by banking via an app.

Fortunately, mobile banking apps are actually quite safe, and banks are constantly working to upgrade their digital tools and stay one step ahead of online criminals devising ways to steal your valuable data. Read on to learn what banks do to protect your sensitive information and what you can do to make it even safer.

Are mobile banking apps safe?

Mobile banking apps have a range of built-in security features to put fences around your information that are difficult for hackers to scale. And this isn’t limited to the biggest banks with the resources to invest in the latest and greatest tech. Even some smaller credit unions and community banks use tools like biometric authentication -- using physical characteristics like your fingerprint or face -- to limit your account access to the only person who should be able to get in: you.

Many banks also use multifactor authentication, which requires a second form of identification such as a text message to your phone to prove it’s really you attempting to access the account.

Many banks also use end-to-end encryption, which prevents anyone from seeing your information while it’s being transmitted.

How hackers can gain access to your banking information

There are several methods bad actors may use to try to obtain your personal or financial information.

• Data breaches: While banks don’t make as many headlines for massive data breaches as retailers, they still happen. For example, Flagstar Bank has suffered three data breaches in three years, and Bank of America quietly informed around 57,000 customers that some very valuable information -- including Social Security Numbers and account numbers -- may have been leaked in a recent data breach. While that isn’t directly related to their mobile app experiences, the implications are similar: It is possible for someone to steal your money or your identity by getting ahold of your banking information.
• App-based banking trojans: Once downloaded, these malicious programs can gain access to your banking information. And they can be tricky to spot. Cybercriminals may send you a text or email that looks legitimate, along with a link. Don’t click links from any unfamiliar senders. If you can’t tell if a notification is legitimate, contact your bank to find out.
• Fake banking apps: Scammers also create fake apps that look just like your bank’s mobile app to trick you into downloading them and entering your login information. Once you enter your information, scammers have access to your account. You should only download a banking app from your bank’s website to ensure you’re using the correct one.
• Unprotected Wi-Fi networks: If you’re using free Wi-Fi at a cafe, airport or any other public location, you’re putting yourself at risk. Hackers can tap into these networks and access your devices. Avoid opening your mobile banking app while connected to any of these networks. You’re better off waiting to look at your account until you’re on your home network.
• Phishing websites and messages: Scammers may also send you a text or email prompting you to click a link and enter your credit card or banking information. In these messages, scammers may pretend to be your bank or someone you know requesting payment for an unpaid bill. As with banking trojans, treat these messages with suspicion and contact your bank to verify if they’re legitimate.

How to keep your data safe when using a banking app

Banks invest in upgrades to regularly identify vulnerabilities in their apps, but keeping your mobile banking data safe isn’t just up to them. You can help protect your information by following these tips.

Create strong and unique passwords

Research from Keeper Security shows that 75% of people aren’t taking the proper precautions to create tough-to-crack passwords. And no, “1234” isn’t a strong password, and neither is your last name or any other easily identifiable words. Your password should be complicated -- ideally, a mix of uppercase and lowercase letters, numbers and special characters.

Also, be sure to create different passwords for different accounts. This way, if your password for one account falls into the wrong hands, scammers can’t use it to get into your bank account. While that may seem like more information to juggle, you can use a password manager to keep it organized.

Protect your login credentials

A strong password is only useful if you don’t share it with anyone. This is another area where a password manager can help. It can help you develop strong passwords and encrypt them on your phone, along with any other devices, such as your computer and your tablet.

Also, make sure you log out of a banking app when you’re done using it. Many banking apps have an automatic logout feature that activates after a few minutes of inactivity.

Set up multifactor authentication

Multifactor authentication is the digital equivalent of presenting multiple forms of ID in person. When you provide both a passport and a utility bill, for example, a company can feel more secure that it’s really you than if you just showed one form of ID.

Many big banks let you enable two-factor authentication, which can strengthen your defense against scammers. For example, you might enter your information to log into your app, then receive a text message with a one-time code to verify your identity. It’s not foolproof, as there are crafty criminals who figure out ways to work around multifactor authentication, but it is worth the extra step.

Keep your app updated

One way your bank keeps your mobile data safe is by monitoring new and existing cyber threats and releasing software updates to strengthen its app’s security measures. To make sure you’re protected by these measures, make sure your phone has the latest version of software installed for your bank’s app. You can do this by manually updating your app through your app store’s settings or enabling automatic updates.

Don’t use public Wi-Fi

Free Wi-Fi can come at a very expensive cost: An increased likelihood of someone on the same network managing to hack into your device. Never conduct banking activities on public Wi-Fi. (Ultimately, you’re better off avoiding doing much of anything over a public Wi-Fi network due to heightened cybersecurity risks.)

Don’t click on suspicious links

Most people feel confident that they can avoid email scams. After all, the story of the Nigerian prince who will pay you loads of money to help him has probably been around since you started sending emails.

However, scammers have gotten increasingly creative with ways to incentivize you to click on a link that allows them to access your information or download malware onto your mobile device. Many of them now use smishing, which sends those links to your mobile phone as a text message. Scrutinize every message that arrives on your phone, and if you have any doubts about its authenticity, don’t click on it.

Monitor your bank accounts and credit report

No matter how vigilant you are in keeping your data safe, there are sophisticated criminals online who could find a way into your financial accounts. So, it’s smart to keep a close eye on your bank accounts to watch for any unfamiliar transactions. In some cases, hackers make a small charge -- just a few dollars, for example -- to see if you spot it before they do significantly larger damage. Review your transaction history on a regular basis for any suspicious activity.

In addition, check your credit report frequently. It can help you spot potential fraud that won’t ever show up in your banking app. If someone manages to open a bank account with your name and Social Security Number, this is how you can find out about the fraud and work to repair the damage.

FAQs