For the last few years, the number of people opting to use online banking has increased exponentially and the trend continues to grow at a rapid pace. Many conveniences gained by the customers when transactions are done through online banking as well as the increasing number of services that are on offer through this method makes it a more sought after technology among many internet users.
With the rapid proliferation of internet banking, many acts of fraud have also taken place and has become a concern to both the customers as well as to the regulating authorities. Many technological and policy decisions have been taken in relation to improve the security of internet banking and more emphasize is been put towards the authentication process during an internet transaction.
In many of the authentication processes, the use of a ‘digital key’ or a signature could be considered as the basis of validity for that particular electronic transaction or the record. Many legislature has been enacted with regard to ‘digital signatures in electronic banking’ as the authorities strived to give legal credibility to such records and accepts such records and contracts that are validated by a digital signature as having the same legal provisions as does a manually signed document.
Technically, a ‘Digital signature’ can be thought of as a mathematical algorithm which generate, transmit and validate the authenticity of an electronic record. It will have three basic rules which govern its process and thus the authenticity. These are,
Generation of a ‘private key’ randomly from a designated set of possible private keys for a particular type of electronic record. A second algorithm will be able to produce a unique signature based on the content of the record or the message as well as the generated private key. Another algorithm will be able to recognize an authentic electronic record based on the message content, private key as well as using the digital signature.
The practice of having a digital signature is now being implemented through legislative enactments in order to persuade the financial institutes to adapt such technologies in order to continue doing banking online. At present, almost all authentic banking portals in the internet does have the protection of a digital signature and has improved its credentials as being safe to a larger extent.
Even though it looks a full proof system for authentication, digitally signed records are also vulnerable to cyber criminals. But, the idea of such a system is to make the records as safe as possible and in many instances, it has done what it is intended of doing.