Barclays and Lloyds are betting on security tokens to combat phishing, and online banking fraud.
Barclays plans to introduce hand-held devices to its 1.6 million online banking customers next year which will read the chip on the customer’s bank card and then provide a unique password needed to access the account on the bank’s website. Every time the customer logs on they will need to get a new password using the calculator-sized device.
….
Lloyds TSB is trialling key rings that generate random passwords for accounts. Alliance and Leicester has also introduced stringent authentication technology.
They are quite certain of the efficacy of this solution.
Barnaby Davis, director of online banking at Barclays, told Computing magazine: “We want to issue the card readers to all online banking customers and not just business customers.
“We have gone for this model because it resists all known methods of fraud.”
Mr Davis said: “We are aware of other organisations that are planning something similar, but we believe this will become the industry standard.”
Yet as the article concludes, the bad guys always stay one step ahead.
Despite the advance of technology, industry experts fear it will not be long before the criminals find a way of catching up. Critics believe online criminals will only develop new methods to hack into bank customers’ details.
Relevance to Bankwatch:
While this will buy some time, it remains to be seen if its a complete solution. Meantime its an expensive gamble to issue and support the tokens. The security infrastructure that supports the tokens is expensive.
Bankwatch 
HSBC is doing the same in India
I have a screen grab in case you want one
Nishad … A screen grab would be great, and I can post it here.
Thanks for pointing out this initiative. Its good to see the high street banks in the UK are doing something positive around the online security problems. I wish that the US banks could learn from the success of this type of security.
I referenced your post in my blog: http://improving-nao.blogspot.com/2006/08/electronic-signatures-physical-tokens.html
My post rounded out a set of three items talking about electronic signatures in financial services.
Cheers
Phil
Thanks Phil. Something thats interesting is the evolving difference in security concerns each side of the Atlantic, and how that manifests in Banks’ responses.
I got the Barclays one… it run out of battery and had to order a new one. By the time a replacement got to me, I was overdrawn and the bank charge me £35 in fees.
So much for extra online bank security.