Security and privacy of electronic banking by

Concerns about Electronic Banking 
Since e-banking is a new technology that has many capabilities and also many potential, users 
are hesitant to use the system. The use of e-banking has brought many concerns from different 
perspectives: government, business, banks, individuals and technology.
Government 
From a government point of view, the electronic banking system poses a threat to the antitrust 
laws. Electronic banking also arouse concerns about the reserve requirements of banks deposit 
insurance and the consumer protection laws associated with electronic transfer of money. On the 
other hand, this has not been readily accepted by its users due to the concerns raised by various 
groups, especially in the areas of security and privacy. Moreover there are many potential 
problems associated with this industry due to imperfection of the security methods. The example 
of Postal Corporations Posta pay led to more concerns about this system. This came as efforts by 
the Postal Corporation of Kenya to embrace technology hit a snag, with the government sending 
forensic auditors to probe the integrity of its electronic money transfer service, Posta pay, 
following reports of millions of shillings lost to fraudsters.
At the center of controversy was an agreement between the Postal Corporation and 
Afripayments, which allows the public to send money using Posta pay and withdraw funds from 
any post office. The partnership, as crafted, had left the software supplier with undue control 
over Posta pay operations, exposing the Postal Corporation to heavy revenue losses, said Bitange 
Ndemo, permanent secretary in the Kenyan Ministry of Information and Communications.
IJCSI International Journal of Computer Science Issues, Vol. 9, Issue 4, No 3, July 2012 
ISSN (Online): 1694-0814 
www.IJCSI.org
435
Copyright (c) 2012 International Journal of Computer Science Issues. All Rights Reserved.

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The agreement stipulates that the Postal Corporation is entitled to 20 percent of profits, while 
Afripayments receives 80 percent. Posta pay was launched in 2006 and has since been exposed 
to fraudsters. Gaining access to the electronic money transfer system, these fraudsters make it 
appear as if money has been sent when it has not been, enabling them to withdraw funds and 
causing losses to the corporation.
The government wants the forensic auditors to determine why the volume of business handled by 
Posta pay has decreased from 600 million Kenyan shillings (US$8.6 million) per month in 2006 
to 400 million shillings in 2007. The auditors were also expected to establish ways in which the 
agreement is compromising accountability and transparency in the state-owned Postal 
Corporation.
In order to reduce the potential vulnerabilities regarding to the security, many vendors have 
developed various solutions in both software-based and hardware-based systems. However 
software-based solutions are more common because they are easier to distribute and are less 
expensive. In order for e-banking to continue to grow, the security and the privacy aspects need 
to be improved. With the security and privacy issues resolved, the future of electronic banking 
can be very prosperous.