Small Banks Not Safe for Business/Commercial Accounts

OLBB mainly blogs about retail online and mobile banking but this is an important issue. As a follow up to our last blog post on the new government (FFIEC) online security authentication guidelines one theme is that the Feds are very worried about commercial/business account protections.

Read Carefully:

It is not required by law that your bank guarantee your money if it gets stolen from a commercial bank account. Therefore, almost no one does (Chase the only exception). Not only is there inadequate protection but the risk is high, because of the large amounts of money and transactions in these type of accounts.

Hackers already know this and have been targeting smaller banks because they are lucrative and vulnerable. In fact, small to mid size banks are getting raided at the pace of $1B a year. See the Bloomberg article link at the bottom of this post for some interesting reading.

Hackers are targeting the small banks commercial accounts because the smaller banks don't have the same security that the big guys have. Most of the small banks are still using security guidelines from 2005 as their security model. Not effective at all in a 2011 world of risk. If you have commercial/business accounts at a small bank and you use online or mobile banking, your money is at risk. This is a big problem for small business as a big hit in capital can shut them down. This hurts our economy in the ripple effect.

I believe that if a law was passed mandating that the bank guarantee losses to commercial/business bank accounts that you would see security significantly improve since the risk would be on the bank and not the business customer. Granted there may need to be fees added to pay for the additional security but a monthly fee seems like a better option that shutting your business down because you lost it all to a hacker.

For the full article from Bloomberg go here. ALso check out the blogpost on the new agency guidelines just released from OLBB.