New Zealand's ASB Bank says over 19,000 customers have registered to use its Netcode SMS authentication system for transacting over the Internet since the service was launched in December 2004.
Registered Netcode users are texted a code when they carry out applicable transactions, which they must enter online to validate their identification. Netcode was developed with RSA Security and with the endorsement of the New Zealand Police E-Crime Laboratory.
Clayton Wakefield, head of technology, operations and cards at ASB says: "Our experience is very positive and we believe we have achieved a balance between the current risk of fraud, the cost of the service and inconvenience of providing an additional step in the online banking process. The reaction from customers and appetite for this type of solution has been excellent, so much so that we are trialing additional security systems as a complement to Netcode."
News of ASB's progress with the system comes as National Australia Bank confirms plans to roll out SMS authentication to all Internet banking users as an optional security layer following a successful trial.
Speaking to the Financial Review, Ean Van Vuuren, NAB's head of channel solutions, says the pilot proved that the system could be implemented without slowing down speed of service for customers logging on to the bank's Website.
As part of the roll out, the bank will also provide an automated service which user's can call to temporarily switch off the authentication procedure if their mobile phone is not working.
The Australian Bankers Association last week said it was working on the introduction of non-prescriptive national standards for two-factor authentication.
Banking concerns about the security of Internet transactions were underscored by a report in the New Zealand Herald on Friday that the country's banks have blocked access for hundreds of customers because they say their computers are infected with a so-called "spyware" programme.
Westpac notified 1400 customers and three other banks had also warned clients that they would not be able to do internet banking until their personal computers are cleaned up, the New Zealand Herald said.
The spyware, created by the American company Marketscore, monitors user Internet behaviour and sells the data to advertising firms. The banks are reportedly concerned about the impact on secure internet sessions when user names and passwords are keyed in.