2012-09-20, @Balticforge

Online banking or NFC?

Online banking or NFC?

Its few decades already when we don’t usually imagine a bank only as a house full of money, just in its physical form. Huge technological shift let us move most of our everyday banking transactions into another dimension – towards to the internet and to the most of the mobile devices connected to it. It’s always been human nature to earn and save money for the living and since people uses different type of currencies for getting what they need bank will be the most popular place for their money to settle in. But why driving hundreds of miles to make any of the banking transactions if we can simply control our money rotation with the help of the internet and new technologies? Engineers had taken advantages of the massive computerization amount and started creating  something very flexible and time saving, to begin from the internet banking and finish with modern mobile banking systems, that lets you have your money operations done straightly from your computer or any mobile device.


Mobile banking system is the whole bank in your pocket, usually in a form of an application created for controlling your banking activities: money transactions, payments, credit applications and every other possible banking operations equal to those at the physical bank. Started from the mobile banking over SMS technology in 1999, it now tries to occupy the whole new spaces of engineering making things even smarter. While some companies still improves mobile banking systems for smart phones and creates new applications others hustle hard searching for new, in their words more innovative ways of making mobile phones and the environment connect. It’s years already, when we first heard about QR codes, and decades if talk about barcodes system. But if its not enough we may refer to the NFC or  Near Field Communication which is the new way for making most of the smart mobile devices radio-communicate with all the possible things found in our surroundings tagged with some small NFC chips.

NFC technology enables smart phones work with magnetic induction, creating radio wave field that lets you send small bits of information from device to device or from device to the NFC chip back and fourth. Such wireless transactions would let us have a connection with a newspaper, a poster in the street or any other thing marked with this chip. NFC business application is trying to occupy spheres of the virtual payment systems, social networks, advertisment and more. Some companies says that this could be a possible alternative for credit and electronic ticket cards or it could even change the popular mobile banking system.

 NFC technology is not as mature and as mastered to rely on it any operations more complex than scanning a music groups street poster in order to get some information about a concert. This RFID (radio-frequency identification) based ideas are already not new, but  it would be wrong saying they don‘t do their job, still the main point is that we have already created more simple and much cheaper ways for doing the very same tasks and NFC is hardly going to replace them. We can start installing millions of scanners everywhere, plus pay double so for improving the whole NFC based infrastructure but it wouldn‘t significantly change the existing situation or peoples traditions and possibly no one would exchange his right to feel safe for a possibility to get almost the same thing they have now. If we want to make money transactions we just log-in to our virtual bank account on our phone and do whatever we want with our money, if we want to pay for something, we do this with „PayPal“ in our phones and so on. The world has already an alternative for what NFC is creating and we happily use that alternative today. Sure, we may still think about improving NFC based electronic ticket idea or similar, but when it comes to your private and very individual information, such as personal, business or banking documents, it is probably not the best decision to count on this quite unsecure innovation. Some independent IT experts even calls NFC a „privacy nightmare“ and they are probably right about that. The total mess would start if the NFC technology appeared in every single VISA credit card as it was planned in USA’s visions earlier. We may only guess, but probably after this step the same would be also accepted elsewhere.

 Why NFC technology is so unsafe?

NFC flows directly by air from the mobile device to the end point and back again. That means that every smart phone powered by NFC technology is able to interrupt to the process and read data from the credit cards or your phone simply “sitting” in the pocket. Hacking into the radio wave field created by the phone-NFC chip connection is more than easy using a portable scanner or another NFC powered phone. Anyway, near field communication wouldn‘t probably dissapoint you if you are up to getting some “Facebook” account information or „reading“ a smart poster in the street, but another thing is when you are planning to connect to your virtual bank to make some payment, this is where we could already advice you to stop if you don‘t want to have your private information leaked. Cards with NFC chips, including electronic tickets, bank credit cards and more, can be extra easily hacked in seconds using just one tool – a portable NFC scanner. You don’t even need to have a card in your hands or in other words to steel it, as it would work through the air by the same radio wave field. Even more, thieves doesn‘t need scanners or similar devices to hack into your data anymore as it can be done through the simple NFC enabled phone. The question is: wouldn’t it be smart to exchange the new, wireless credit cards for old fashioned ones and eliminate NFC from the money operations at all until its too late? We shall understand that innovation level must never overcome or ignore the safety level. There are certain situations showing that innovating is not necessarily the way to go – especially when we risk our privacy or money.

Comparing NFC based banking system idea and already existing mobile banking for the Android (U.S. bank mobile app.), Apple (CIBC, NatWest mobile banking apps) or other smart phones and mobile devices, we must face the fact that M-banking schemes are twice safer than the NFC newcomer and despite the flexibility of near field communication M-banking is much more suitable for the usual money operation nowadays. Both types of those virtual paying systems requires constant internet connection in the mobile device and as minimum one installed application for connecting you to your bank account, in NFC’s case your phone must also support NFC and clearly not every phone has this function.

Apple killed Near Field Comunication?

Let's take the whole new iPhone 5 as the example, as this smart phone doesnt support near field communicating and is not planning to. „Apple“ says "it’s not clear that NFC is the solution to any current problem..". „Apple“ is one of the first leading companies to reject the NFC despite that it is more time saving and a little bit more flexible. „PayPal“ is also heading towards „Apple‘s“ way and though they are not rejecting NFC technology at all, they still believe that NFC infrastructure is absolutely not ready to be accepted today. These two giant companies are only few of those who claims that NFC today still stands for „Not For Commerce“. Looking from the financial point of view it would definitely cost much more for the NFC technology to start functioning at its maximum than perfecting and mastering already existing business model – mobile banking. Companies would save millions on embedding the NFC chips and integrating NFC readers everywhere which is the essential part of the NFC working scheme. It is not necessary to do additional things like purchasing expensive hardware, installing it and more for getting the same results. And really, why chosing an egg tomorrow if we can get a chicken today?

While NFC is only starting its journey to our everyday life, mobile banking systems are already serving us with functional and comfortable ways of controling our money rotation. Mobile banking technology is not far from making our smart phones become our wallets and its already earning credits through assisting us in different type of money operations. We can now buy, sell, pay or even get advised by our own phone in usual money situations. No additional equipment, no possible risk of losing the privacy, no need for constant bank visits and no expensive chips to be sticked everywhere around –  only few of the reasons why M-banking is here to stay sending the NFC for futher researches and improvment.

Read more about card vs online banking

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