Upgrading to real-time banking technology is a very bad idea


Banking Card

There are dozens of reasons why upgrading the current systems used by banking institutions is a great idea. With many systems having been built in the last century, the technology exists today to make things cleaner, more streamlined, and better overall. The one aspect of 2011 technology that does not belong in banking is real-time processing. The reason – security.

Word is spreading about plans by 5 of the top 20 major banking institutions to move to more advanced real-time systems that will allow them to generate more revenue. On the surface, it seems like a win-win situation. People want their transactions to occur immediately and they want the records to be accurate at all times. Unfortunately, the trade-off is that it opens up a major gaping hole.

“Five of the top 20 banks are engaged in some sort of core banking replacement and we expect to see another three or four in next 12 months,” said Fiaz Sindhu of Accenture. “They’re looking at those upgrades as a path to growth.”

Growth comes at a price. Currently, the delays associated with banking are often the very things that keep our money safe. Real-time banking represents a potential exploit that hackers will be able to take advantage of when trying to get to the banks’ money. The Federal Deposit Insurance Committee (FDIC) may be able to guaranty our money, but a wide-scale attack could cripple banking, freeze funds, and cause mass-turmoil in an economy that is so reliant on cash availability.

There is simply no way to make a real-time system that can stay locked down the way that a delayed banking system can. Real-time is real-time, and you can know with a 100% certainty that those nefarious types who are after quick riches will be working hard to find the exploits. It will happen. It’s just a matter of time before someone is careless, some loophole is found, or someone is corrupted into making a poor decision.

It will happen. The only question that remains is, “When?”

  1. The post would be useful if it gave any example or more specific idea of why real-time bank operations would be more vulnerable to attack than delayed operations.  The only immediate one that comes to mind is “with delayed banking, you have more time to check the operation” but in reality, fraud checks are done by computer in a very short amount of time these days, and paper checks will eventually go the way of the dodo too.

    Although it might seem instinctively true to say “faster transactions means more potential for fraud”, given the potential new business models that would come from real-time banking, it would seem justified to ask for specifics before crying wolf.

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