The first group is the “Competent but Careless” bracket that consists of individuals between the ages of 18-24. Adam Wosotowsky of McAfee Labs told us that this group has grown up on the Internet and that they are less likely to use antivirus protection.

“They feel very confident about their ability to use computers,” he said.

The second group is the “Confident but Casual” bracket, which includes consumers from 25-45. Wosotowsky explained to us that, since this group has seen the Web develop, they are more aware of issues that can happen. While they are more paranoid than the younger group, they are still not as cautious as they should be.

The last group is the “Conservative and Cautious” category and, of course, is made up of people over the age of 45. Most of this age group is not as familiar with the Web as the other groups are and, therefore, is very cautious in their behavior.

Does your age group match how you behave online? Let us know.

Through online banking, each of these age groups is susceptible to phishing attacks, infections, drive-by downloads, and more, all of which could cause very harmful results. Speaking of drive-by downloads, specifically, Wosotowsky said, “Once you become infected, then at that point in time, the botmasters have full control over your machine.”

Fortunately, there are steps that users can take to help them avoid these attacks. For starters, Wosotowsky recommends that consumers be on the lookout for copycat sites. For instance, the title of your bank might be in the domain name somewhere, but if the site does not have the exact same url as your bank’s website, don’t click on it.

Secondly, he warns against clicking on links in emails. If you get a notification in your email asking for username and password verification, go directly to your bank’s website to see if the notification is legitimate. If it is, you can proceed with offering your information, but if not, you have saved yourself from getting hacked.

Even though this sounds simple, Wosotowsky says it is always a good idea to have strong passwords or phrases. He actually believes that long phrases are more effective than just a password.

Fourthly, for those consumers that utilize mobile banking, it is very important to find an app directly from your bank or financial institution. Wosotowsky told us that there are a lot of third party banking apps to choose from that are bogus.

Wosotowsky also believes that consumers should protect themselves through antivirus measures. He said that it not 100 percent bullet proof but that it is better than nothing.

Are you taking proper precautions that you need to take in regards to your online banking habits?

BankSimple was co-founded by Alex Payne, a former Twitter engineer, who was there from the beginning, and worked primarily on building Twitter’s developer platform and on the service’s core infrastructure. Think about how much of Twitter’s success has been based upon the developer ecosystem around it. "It was an education in scaling, optimization, and systems architecture, not to mention all the joys and stresses that come with working at a growing startup," says Payne of his time at Twitter.

BankSimple says it is designing "true mobile banking", and shouldn’t be confused with Square, another startup from a Twitter vet (co-founder Jack Dorsey) looking to disrupt the credit card industry. 

"BankSimple is doing something no bank has ever done: We’re designing our web and mobile experiences in tandem," the company says. "Deposit checks by phone. Authorize transactions by phone to prevent fraud. Categorize spending on your phone as it happens. That’s just the beginning."

"Part of Banksimple’s secret sauce is its predictive money management model," wrote Jennifer Van Grove, who interviewed Payne about the company last summer. "While users only need to concern themselves with a single account, there are actually checking, savings and credit accounts tied to that one login. Those will function behind-the-scenes with Banksimple automatically managing funds and transferring money between the accounts as needed."

Based on the interview, it sounds like much of BankSimple’s success will depend on the developer community, not unlike Twitter. It’s a whole new ballgame when you’re talking about bank accounts, though, and Facebook/Twitter integration (which it is supposed to have) could be a little scary for some people. 

BankSimple says its team is made up of people with backgrounds in a range from bank strategy to data science to software engineering, and has worked in financial services, information security, "top-tier" consulting firms, and successful startups. 

Last week, the company announced a new customer relations team, which should be key in its quest to provide customers with a Zappos-like customer experience as described in the interview with Payne. 

The product will be coming this year, according to BankSimple’s website, and they’re currently letting people sign up to be on their beta list.

"The recent arrests in the US and the UK indicate that financial fraud is not the business of individuals," says Trusteer CEO Mickey Boodaei. "Behind these operations you can find groups of people which in many cases operate for larger organized crime groups. They have the money and the means to run large scale sustainable criminal online operations. As time goes we’re seeing more groups which are larger than before, more efficient and knowledgeable than before, and as a result much more successful than before."

"However, recent successful arrests in the US and the UK show that law enforcement, with the help of the banks, their customers, and the industry, are capable of tracing these people down and get them behind bars," he adds. "More efforts are needed for this good start to become truly successful. Financial fraud can be stopped from spreading if financial organizations and customers continue to improve security and work with law enforcement to go after cyber criminals."

"These arrests show that some of the criminal groups behind Zeus are doing a poor job in covering their tracks," Boodaei continues. "The police did a great job in tracing down this group and gathering information that can facilitate their arrest. This is not a simple task and I’ve heard many people saying that this is almost impossible due to the level of sophistication from criminals and the complication of the justice system. However, this week’s crackdowns in the UK and now in the US, along with a few others that preceded them show that this can be achieved."

Trusteer and some other organizations have actually been involved in an initiative in which they were able to penetrate the criminals’ servers and gather a lot of evidence, Boodaei tells us. "This shows that criminals are vulnerable," he says. 

"By running more operations like this and by the banks and other organizations investing effort in tracing fraudsters and not just blocking their activities, there is a good chance we can lower the volumes of attacks," says Boodaei. "Customers can take their banks’ advice and implement fraud prevention tools that provide valuable capabilities to banks in detecting and blocking these threats. By working together we can definitely stop this threat from growing."

According to PCWorld, the Zeus software is sold in black market forums and there are over a dozen Zeus gangs in operation around the world.

The study found that despite the drop, online banking still faired better than offline banking channels and most other online industries with the score of 80 considered to be the threshold for excellence.

"Despite everything that’s gone on in the financial sector over the past several years, including a stumbling economy, bailouts, and credit freezes, financial institutions have turned to their websites as a way to maintain and even increase customer loyalty," said Larry Freed, president and CEO of ForeSee Results.

"While the dip in score could predict more trouble for the recovery, it also shows that the online channel continues to be the most effective marketing channel for banks and credit unions."

The five largest banks in the country (Bank of America, Citibank, Chase, PNC, and Wells Fargo) scored the lowest in the study, while credit unions tend to have the highest online customer satisfaction scores. However, with all financial institution categories scoring higher than 80, online banking (81) is providing more satisfaction than offline banking (75).

"When it comes to customer satisfaction, big banks, with relatively unlimited resources, are not performing as well as smaller institutions with fewer resources," added Freed.

"While the big companies try to outdo each other with lots of flashy bells and whistles, the small banks have had to keep their focus on satisfying the customer because that’s the only way they can compete. And as the data shows, it’s paid off."

The study also found highly satisfied online banking and credit union customers report being:

*56% more likely to purchase additional products and services and 65% more likely to increase online bill payment.

*64% more likely to use the website as the main way for interacting with the bank

*76% more likely to recommend the bank overall and 63% more likely to recommend the bank’s website.
 

"This marks a watershed change," said Nessa Feddis, ABA senior counsel and retail banking expert. 

"It tells us that for the first time, more consumers prefer the speed and convenience of conducting their banking transactions on the Internet than visiting their local branch.  It also tells us that consumers now have confidence in the accuracy and security of online banking," she added. 

The survey found the popularity of online banking was not just among the youngest consumers. Banking online was the preferred method for all bank customers under the age of 55. Consumes over 55 still favor visiting their local branch (26%), followed by ATMs (17%). 

Among all consumers, the preference for online banking was followed by visiting branches (21%), and using ATMs (17%). The use of mobile banking was favored by one percent of consumers, mainly among 18 to 34 year olds. The popularity of ATMs was down in all age groups.

"Online banking may now be the most preferred method of banking but banks are committed to providing the best customer service to all consumers," said Feddis.  

"Increasing competitive focus means bank customers will continue to have the choice between branches, ATMs, telephone, cell phone, or the Internet to conduct their transactions – whichever they find most convenient for them."
 

"When we set out to measure the efficiency of anti-virus products in the wild against Zeus, we had no idea what kind of results we would get," said Amit Klein, CTO of Trusteer and head of the company’s research organization. "The findings, that up-to-date anti-virus programs were only effective at blocking Zeus infections 23 percent of the time, are disturbing. This is bad news for consumers and banks, since the vast majority of Zeus infections are going unnoticed."

Zeus infects computers and waits for the user to log onto a list of targeted banks and financial institutions, before proceeding to steal the user’s credentials, which are then sent to a remote server in real time. If that wasn’t enough, it can modify web pages from a bank’s servers in the user’s browser and ask for personal information, such as card numbers, PIN numbers, passwords, etc.

Here are some numbers from Trusteer, collected from consumer PCs one day this month:

Perhaps the most disturbing part of Trusteer’s findings is not that Zeus is bypassing up-to-date anti-virus programs so frequently, but that the majority of infections appear to be occurring on up-to-date machines.

Trusteer’s findings stem from a sample of more than 10,000 users of the Rapport browser security service, whose machines were infected with the Zeus Trojan. The company’s full report on the issue is available here (pdf) for further details.

"For the first time, more consumers paid bills via bank sites in the past month rather than biller-direct sites," James Van Dyke, President and Founder of Javelin Strategy & Research said.

"But many banks and credit unions have been slow to upgrade, which has created a wide gap in online capabilities and usage when comparing the nation’s biggest banks to smaller banks."

The report found six in ten of online households bank online weekly, a 12 percent increase from 2008 and seven in ten households pay bills online monthly, up from 64 percent in 2008.

Javelin says the increase in online banking is driven by the recession and people wanting an efficient way to mange their personal finances.

Key findings of the report include:

•  83 million households will bank online by 2014.
•  Smaller banks are struggling to keep up with bigger banks online.
•  Bank fees are the main reason people switch financial providers.
•  Consumer demand is building for online personal finance management tools that consolidate money-monitoring capabilities offered by free web sites with those offered by banks and credit unions.

"The playing field is dominated by Bank of America, Citi, JPMorgan Chase and Wells Fargo, which have set the bar high for what consumers can expect from a full-service online-banking operation," Mark Schwanhausser, Research Analyst at Javelin said.

"Nearly six out of 10 customers paid a bill online through these titans in the previous 30 days, which is significantly higher than the number of consumers that paid bills online at regional banks, community banks, and credit unions."

"As consumer adoption of online banking increases, banks are searching for ways to differentiate their services while maximizing the cost-effectiveness of self-service channels," said Stessa Cohen, research director at Gartner.

Stessa Cohen

"Online banking represents a key opportunity to achieve these objectives if banks can provide the features that consumers prize most highly."

The survey found U.K. and U.S. consumers are heavy users of online banking and have many options to choose from. More than half of consumers said they used only one online banking site, but more than 40 percent use two or more online banking sites, meaning they are able to compare online banking features on a regular basis. Banks that don’t offer similar features will be at risk of losing their online banking customers.

Both U.S. and U.K. consumers ranked security as the most important online banking feature, followed by a single sign-on. They also ranked highly the ability to deposit checks online from home and the ability to set up a separate account to save up for a specific goal. Other top ranking features included the ability to sep up alerts for account and credit card balances and the ability to analyze spending and cash flow.

Younger online banking consumers value features that allow them to customize their online banking experience, while older customers seek tools that let them use current services more effectively or communicate better.

"The survey showed that banks and customers want very different things on a bank’s Web site," said Ms. Cohen. "Customers want to personalize their experiences, analyze their transaction and payment data, so they can better manage their money, pay bills and transfer funds," Ms. Cohen said.

"Banks want to sell customers more products. Banks that neglect personalization trends now will sacrifice online – and possibly mobile – banking customers later."

A total of 69.7 million households with Internet access now use online banking services to access balance, account history and to transfer money between accounts. In addition, 64.4 million households pay at least one bill online at a bank website or at a company website.

Geoff Knapp

"We believe that consumers will continue to conduct more and more of their financial activities online," said Geoff Knapp, vice president, Online Banking & Consumer Insights, Fiserv.

"Online banking and bill payment is a free service, and a convenient and environmentally friendly way to bank. Consumers are actively becoming fans of the user-friendly, secure services financial institutions are implementing."

Among those surveyed, 41 percent of online banking users said they planned to pay more bills online at their financial institution’s website in the coming months, while 35 percent who pay bills directly at company websites said they plan to pay more bills online at those sites.

The survey found the major reasons people pay bills online were:

 Speed - 79 percent of consumers said that they preferred to pay bills online because it was faster than other payment methods.

 Ease of Use - 72 percent of consumers said paying online was easier than paying by check.

 Cost Savings - 71 percent of consumers said they liked saving money on stamps.

 Control - 71 percent of consumers said that paying bills online gave them more control over the timing of their payments.

The survey also found people who pay bills online at a bank website are more likely to continue doing business with their bank.

49 percent of consumers who use online bill pay said they are less likely to switch banks due to their experience, up from 43 percent last year.

67 percent of online bill pay users would recommend their bank to a friend or relative.

Over a period of three months, 38 percent of online bill pay users recommended the service to others. Those recommending the service did so an average of two times.

Security concerns about online banking decreased from 17 percent in 2007 to 13 percent in the latest survey. Overall, online security was third among barriers to online banking this year compared to its number-one spot in 2007.

An estimated 31 million households use online banking Web sites to pay bills, 47.9 million households use biller Web sites and 16 million use both online banking and biller sites to receive and pay bills. About 63.1 million households pay at least one bill online in an average month, an increase from 61 million in 2007. These households collectively paid 934 million bills in a typical month.

Internet using households pay an average of 11 bills per month. Online bill payments at bank and biller Web sites made up 42 percent of total monthly payment, followed by 31 percent of bills paid by check.

Fifty-one percent of survey respondents said the environment was a reason they chose to pay bills online. Saving time and gaining control over their finances were benefits cited by 44 percent of respondents.

Other reasons for paying bills online included reducing clutter, saving gas, and not having to buy stamps.

"As more consumers gain experience and become more comfortable using the Internet, their confidence in online security grows and we see an increase in the adoption of online banking and bill payment services," said Todd Lesher, division president, CheckFree electronic Banking Services, now part of Fiserv. "

"For a minority of users who haven’t used the Web as long, we see that security concerns remain a significant barrier to online banking and bill payment adoption."