Clients seen as most vulnerable in online banking Are financial transactions safe over the Internet Thus far, Korean banks have claimed Internet banking is a secure and handy system. But two crimes earlier this year have prompted people to doubt its security. They are worried their money is vulnerable to smart defrauders. In May, two hackers drew 50 million won ($48,000) from a woman's account at Korea Exchange Bank (KEB), after acquiring her account information through a spy program. Two months later, a fake Web site was detected imitating that of Kookmin Bank, marking the first attempt to steal personal identification through a Korean site. KEB is the nation's seventh-biggest bank by assets while Kookmin Bank is the primary one by most measures. Experts say the two crimes show the country has been too complacent while developing online banking security measures, into which they have channeled a lot of funds. "Most Korean banks have invested heavily in making their Internet banking systems invulnerable to invasion. But some hackers managed to outfox the banks because they targeted unsuspecting customers instead," said Choi Won-hyok, a researcher at domestic anti-virus program maker Hauri. He added the two incidents should serve as a wake-up call for banks since they have left the security of customer information to the customer themselves outside banks. New Ways of Banking With the advent of the Internet and mobile phones, changes were made in the way people undertook transactions and payment. Instead of visiting bank branches in person, they could check their balances, view transaction records and perform transactions via the Internet or Internet-enabled mobile handsets. Korea has led the online banking trend, including both Internet banking and mobile banking, thanks to its tech-savvy citizens and state-of-the-art infrastructure for both the Internet and Web-capable cell phones. Fixed-line access to the Internet is ubiquitous across the country with about 12 million out of 15.5 million households hooked up to the always-on Internet. More than 30 million people out of Korea's 48 million carry mobile phones that can be connected to Internet-on-the-move services. Korea's world-envied infrastructures enabled online banking, and tech-aware Koreans braced for the burgeoning new online banking offerings. According to the Bank of Korea (BOK), the number of transactions on the Internet almost doubled in two years from 4.8 million in 2002 to 8.7 million last year. As of the end of 2004, Internet banking users amounted to 24.3 million compared to just 4.1 million in 2000. Everyday up to 10 million banking transactions are performed in cyberspace. The central bank also said the number of mobile banking transactions jumped about six-fold in two years from 1.1 million in 2002 to 6.3 million in 2004. Online banking, including transactions through the Internet and cell phones, is expected to soon emerge as the primary means of banking. Nineteen domestic banks in June saw their online banking usage continue to surge, rising to 30.5 percent while banking with tellers fell to 30.6 percent. Experts expect Internet banking to rise above traditional banking with tellers soon because Internet banking is more convenient and economical with lower service fees. Service charges on account transfers and money remittance via tellers at bank branches range between 600 won and 3,000 won. By contrast, Internet banking charges only 300- 600 won for the same service. In addition, with the introduction of a cheaper Internet platform of wireless broadband, named WiBro, next year, the country's dependence on online banking is expected to further increase. Primary fixed-line operator KT plans to embark on a commercial service of the homegrown mobility-specific Internet next April at an affordable price. WiBro, formerly known as the 2.3-gigahertz portable Internet due to its bandwidth, enables people on the road to remain connected to the Internet at the speed of current fixedline broadband. After the Internet cafe incident, KEB made anti-key logger programs mandatory for Internet banking service subscribers and also overhauled its security card system. Experts point out that the incident shows how the nation should react to the emerging strain of Internet banking hacking and identity fraud. "Actually, our banks have an advanced Internet banking system with multiple layers of security. In the United States, most online banking systems still use single password protection," Hauri's Choi said. "Such a complicated authentication system helps prevent online fraud attempts or identity theft. But we should know that swindlers look to invade customers' computers rather than banks' central systems. The really vulnerable point is the client."