Electronic Banking - Is your money safe in the banks?

SINGAPORE: All OCBC customers affected by the recent SMS phishing scam will receive "full goodwill payouts" covering the amount they lost, the bank said on Wednesday (Jan 19).

More than 100 victims have received the money, it said in a statement, adding that arrangements for the payouts will be made with all affected customers by next week.  CNA

The above is the result of scamming and phishing in the electronic banking system. OCBC is the first published case when more than 400 victims had their bank accounts violated and emptied. Other banks are coming out warning their customers on how not to be caught in the scam and losing their money.

In traditional banking, such things would not have happened. When one puts money in the bank, it is about the safest place for your money to be, better than in the piggy banks at home or under the pillow. No sleepless night worrying if the money is still there.

With the latest development, not that it is new or had not happened before, would the depositors be having sleepless night wondering if their money is safe in the banks, or would they have to be constantly checking their bank accounts, or scare out of their wits whenever they received a sms in the mobile from the banks or from scammers? Is this the price to be paid by depositors when money lost due to scams and phishing is not guaranteed by the banks? Note, OCBC is returning the lost money to the owners out of goodwill this time, not legally or mandatory and can refuse to make right the money lost the next time. What if the amount lost is much much more, in the hundreds of millions involving bigger number of customers, would the banks still honour the money kept with them or wash their hands and disclaim any responsibility, or perhaps return a token sum?

Would MAS come out with a ruling, a regulation to clarify on this matter? The situation is getting bad as the scammers are getting very brazen and aggressive and many innocent depositors would not even have any clue of what happened and when or how their money were stolen from their accounts.

Who should be responsible for the money given to the banks for safe keeping? The electronic banking system is designed by the banks. Should not the banks be held responsible as it is their system and they are supposed to provide all the necessary safeguards and to protect the money from being stolen while in their care? The banks must have a fiduciary duty and responsibility to ensure the system is secure and the money of the depositors are secured and safe. It cannot be a case of not their responsibility, and if lost they have a right not to make good the money but only on goodwill, ie discretionary, they can refuse to accept responsibility for the lost of the money, and no need to pay back to the depositors.

If this is the case, is your money safe in the bank? Would depositors dare to continue to leave their money with the banks when the banks are employing many foreigners from God knows where to maintain their electronic banking systems, with access to the money of the depositors. With the sophistication of the electronic systems, digital money can be transferred all over the world and very difficult to trace or recover, unlike the good old days when the bank staff were mostly citizens and the physical money could only be carted away in wheelbarrows if the quantity is big.

Would this become a new crisis of confidence for the banks? Who is there to protect the depositors? Is there any law to protect the depositors when technically the scam could be an internal job with so many foreigner programmers and software engineers employed and maintaining the system, have accessed to the system?

What do you think?

 

PS. I have even reduce my credit card limits to a minimum. Cannot trust the system anymore. In the past it is always trying to max the limit possible. And the banks too would be asking customers to increase their limits. Now who dares to increase their limits to be available for scamming? This may even destroy the credit card business.