Identity Theft in UK Banking Sector - Essay Example

? IDENTITY THEFT IN UK BANKING SECTOR College: Research Proposal, Identity Theft in Uk Banking Sector Introduction Identity theft is the illegal and the unconsented acquisition of another person’s personal information such as identity card number, bank account number and password with an intention of using it in fraudulent operations. With the current embrace of technology in the business sector, the internet has become a new platform for theft especially with most internet users being ignorant of their privacy and security in their online presence. In the UK, the banking sector loses over ?1 billion every year to identity theft which is already sending warning signals to the online bankers. With more banks venturing in online services and online financial transfer is dominant in these sectors, the banks and the customers are at a very high risk of losing their money to fraudsters. This research intends to narrow down to cybercrime, an area that has had little coverage by researchers of identity theft, yet a threatening one. By taking a quantitative approach to identify the severity cybercrime in identity theft and identifying possible security approaches that can be used to reduce instances of identity theft, it is possible to make viable recommendations that would go way far in reducing identity theft. Problem statement In the UK, the banking sector loses approximately ?1 billion to cyber crime and customer trust is at stake in this sector (Barclays, 2013). The banking sector is a major contributor to the economy of the country contributing about 8% of the UK Gross Domestic Product. Therefore, it is one of the sectors that must be protected to ensure economic stability in the UK. Online banking is an innovative strategy that has enhanced business growth in the UK and has ensured customer comfort and satisfaction. However, as the internet technology grows, network aware experts delve in cyber crime and take advantage of innocent customers who do not know the threats that they expose themselves to wherever they conduct an online bank transaction in the UK. By identifying the vulnerability of the people and possible mitigation measures it is possible to protect the banking industry and consequently contribute to the economic development of the UK. Research Questions This research study intends to provide the answers to two critical research questions; What are the factors that predispose customers to identity theft during their online transactions? And what are the possible mitigation measures that would reduce the risk of customers falling victims of cybercrime? Objectives of the Study Main objectives To identify the factors that predispose customers to identity theft during their online bank transactions. To identify possible mitigative measures to protect online bank transactions from cyber crime. Specific Objectives To gather information from the public on their awareness risk of the identity theft while conducting online bank transactions. To assess the UK bank's security policies that protect their customers from identity theft within the scope of their online services. To identify the efficiency of the banking security policies in protecting their customers from cybercrime. To quantitatively analyse the data and make possible conclusions on identity theft To make viable recommendations on the possible measures that can protect bank customers from identity theft. Literature Review According to Haldane (2011, Para. 3), an economic analyst, the UK banking sector contributes to over 8% of the country gross domestic product and employs millions of UK residents. This points out that the UK banking sector is a major contributor in the economic development of the country, hence the need to protect it from any kind of business threat. Surprisingly, the UK banking sector continues to lose over ?1 billion every year from identity theft which has led to loss of trust in customers and a consequential drop in their revenue margin. In the current technology driven business sector, online bank services are something that the banks cannot do without in they have to meet the expected business standards in a competitive market environment. Consequently, the only way to regain customer trust for their services is not to withdraw their online services but to beef up security and reduce the instances of identity theft. Identity theft has garnered a lot of interest from researchers after an outcry from both customers and the banking sector expressing their exposure to fraudsters especially in their online global strategy. A research by the European commission (2012, p. 5) found out that cyber-crime has underpinned identity theft as most online service users lack the knowledge to enhance privacy while conducting online transactions. Loza (2004, p. 15) found out that more than 70% of the online bank customers are unaware of the cybercrime threat and are at high risk of suffering from identity theft. 8% of the online PC users in the UK have already fallen victim of identity theft and only 15% of the PC users are aware of the dangers of online business transactions in the banking sector. From this point of view, most online bank customers are ignorant of the looming threat of identity theft, hence do not find the need to engage in security measures. Cyber crime is a trend that is growing in the UK after a decade of the surge in technological adoption among the public. Currently, over five million individuals have access to broadband internet connection without even being aware of the security threats that is posed by these access points. The banking sector has adopted a global strategy by engaging in the development of sophisticated online services that include the purchase of goods, online bank transfers, credit purchase from the bank, online digital signatures and the online purchase of stock shares. These services prompt the customers to input their credit card numbers, passwords, identity card numbers, years of birth, and digital signatures. Supplying this information provides fraudsters with opportunities to have access to this information. As online business hits the ?3.5 trillion mark and attracting over 60% of bank customers in the UK, exposes more and more individuals to identity theft. Technological development has pushed the level of cyber crime to higher levels giving attackers more advantage to capture personal information from bank customers. Attackers have advanced internet culture skills that enable them to develop fake online websites to capture personal information from the public. Shinder (2002, p. 102) points out that hackers have more than a hundred tools for password cracking to help them decrypt passwords that are encoded through the use of simple algorithms. Customers who use WEP security in their wireless internet access point and MD7 encryption algorithms while transmitting data are at the risk of supplying fraudsters with their bank credentials. Moreover, attackers introduce viruses and Trojans in online websites to make the process of acquiring personal information easier and undetectable. Considering the sophisticated technology used in hacking and cybernetics to acquire information from bank customers, it is important for customers to be aware of the need for effective security measures while conduct online bank transactions. Wall (2007, p. 57) identifies that there is a concession among researchers that ignorance in the public exposes the public to identity theft in the UK society. Most researchers found out that bank customer rarely ensure security in the internet use. Most internet users will use low security wireless encryption algorithms that expose them to cyber crime. There is also an agreement that bank management has little input in maintaining security in their online services and hence pose their customers to the risk of identity theft. However, there seems to be no convergence on the angle in which this problem should be approached, either from the bank management side or the customer end side, or even both. The aim of this research is to identify clearly the best approach that can be used to hasten the process of combating cyber crime and identity theft in the bank sector. Methodology A quantitative approach will be used to gather, tabulate and analyse data in this study. The study population of the study is the entire banking sector including the bank management and the customers in the study. Ten UK banks that have offered online services will be selected and a sample of 150 customers will be taken from the UK populations. Closed-ended questionnaires will be used to gather data from the public and from the bank managers in the UK banking sector. Data on the financial aspects of the sampled banks will be abstracted from their online websites and this data will be complied for processing. A secondary research will be undertaken to validate the data obtained from the primary research. The data will be tabulated as follows for each bank; Bank Security Policies No. of instances of identity theft in 2012 Total Amount of cash lost to identity theft The amount recovered after a reported identity theft 1. 2. The data will be analysed by use of the SPSS statistical package to obtain the percentage and mean loss of the bank and customers to fraudsters. The efficiency of the various security policy measures used by the banks will be measured by evaluating the frequency of attacks and the total loss of the bank to identity theft in the year 2012. The awareness of the bank customers will be measured by computing the percentage of use who have suffered from identity theft, those who are conscious of its existence and those that have no prior knowledge of the issue. The project timeline is as follows. Total Period of study 4 months Period per activity 1 month 2 months 1 month Phase 1: Preparation 2: Data collection & Analysis 3: Data presentation and Reporting Activities Formulation of questionnaires and selection of sample population. Consolidation of data, tabulation and computation of critical parameters Organization of statistical output, development of recommendations and report writing Ethical Statement For the purpose of this research, there will be no mention of corporate or individual names of the sample population of the study. The subject of this study will remain anonymous and will be guaranteed privacy. Consent will be obtained from the subjects of this research before questionnaires are disseminated to them. The purpose of the research will remain to be a strategy to fight cybercrime and to beef security in the banking sector to reduce identity theft. Bibliography Barclays, 2013. Preventing ID Theft: Protecting Your Identity. Available through: < http://www.barclays.co.uk/Helpsupport/PreventingIDtheft/P1242560035872> European Commission, 2012. New Legal Framework: Identity Theft. Available through: < http://ec.europa.eu/dgs/home-affairs/e-library/documents/policies/organized-crime-and- human-trafficking/cybercrime/docs/final_report_identity_theft_ 11_december_2012_en.pdf> Haldane, G., 2011. What is the Contribution to the Financial Sector. Available through: < http://www.voxeu.org/article/what-contribution-financial-sector> Loza, E., 2001. Internet Fraud: Federal Trade Commission Prosecutions of Online Conduct. In: Communications and the Law, Vol.23 Shinder, D. L. (2002) Scene of the Cybercrime: Computer Forensics Handbook. London, UK: Syngress Publishing Wall, D. 2007. Cybercrime: the transformation of crime in the information age. Cambridge, Polity. Read More