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Extensive safeguards intended to make online banking more secure may be making customers suspicious their money is at greater risk, a study has found.
Most New Zealand banks have two security steps in place, where online customers are asked to provide pin numbers and/or answer a personalised question to gain access to their accounts.
However, many overseas banks have several more hurdles in place to make sure legitimate customers rather than hackers are accessing accounts. The Massey University study, by Dr Hokyoung Ryu and researcher Kansi Zhang, found customers of banks with six, seven or eight checkpoints felt their money was less secure.
"One participant who anecdotally reported using a Chinese online banking system in New Zealand said having to fulfil six identity-checking steps compared with two for a New Zealand bank made him suspicious that the bank was more susceptible to security risks," Dr Ryu said.
Internet NZ executive director Keith Davidson said the study's funding did not echo any other research he had seen. "Most people I tend to talk to on this issue are asking for an additional factor of identification, but then the people I am talking to are normally more internet savvy."
In July the Bankers' Association issued a new code of practice which said internet customers could find themselves liable for any loss suffered through online fraud if they did not have up-to-date protection software.
However, some banks, notably Westpac and BNZ, have promised to pay back any money lost by victims of fraud. BNZ has also announced it will make two-step verification of online transactions compulsory by March.
Banking Ombudsman Liz Brown was also surprised by the study's findings, and thought people's suspicions might have been exacerbated by poor communication by banks.
"I think people like a degree of simplicity in the communications from their banks and they find that if they are faced with either a lot of verbiage, when you are talking about printed material, or a lot of hoops to go through when you are talking about online material, it does raise suspicions that there is some sort of fish hook in there", Ms Brown said.
"I think it's also very important that people understand why they are being asked to jump through the particular hoops, otherwise they may go looking for explanations and they may not be the right ones."
The Massey study was based on an experiment which involved four mock registration pages similar to those used for online banking transactions. Participants first completed a two identity-checking steps process, followed by four, six and eight steps.
Dr Ryu said banking site designers needed to strike a balance between ensuring online customers felt their funds were safe and making their sites user-friendly.
