Finally, the government steps in to protect the customers of online banks from crooks. This article explains very comprehensively about the implementation of two-factor authentication:

The Federal Financial Institutions Examination Council is giving banks until the end of next year to implement two-factor authentication for online transactions.

Two factor authentication aims at better security. This means that customers of banks using this method will have to identify themselves dual-way. One would be the simple identification – username and password and the other is the verification of a code.

The code would appear on a personal device such as the SecurID Token used by the American Bank Online. It is a small device on which numbers would change every minute. So while logging in to your account, you will have to write the number shown on the screen of your device. This method insures tight security and near impossible access of your accounts for the crooks.

According to this article, banks implementing this system will have to incur huge expenses. This would result in an increase in their running costs and eventually a cut down in the interest rates. This is just hypothetical, but obviously increasing expenses of the banks would mean some cut in the high returns on the CD’s or cash deposits.

Apart from that, this system might prove ineffective when the perpetrator is using Trojan Horses to track down the passwords. The article advocates this fact by citing Security expert Bruce Schneier, CTO of Counterpane Internet Security comments. Moreover, in case of phising attacks this system would again be of no help. Because phishing involves users who are deceived into giving away their identification – be it a password or now, the verification code. Furthermore, the intervention of the government is seen as something suspicious by many customers who do not want to see government intervention in their accounts.

On the other hand, optimistic customers not only see this change as increased security but also safer online banking. Moreover, some commentators argue that banks using this system might disperse the crooks to other banks where security is less tight. It also brings the news of destruction to the crooks in the password market. Previously, crooks could obtain passwords and sell them to other crooks for cash. But with this system, it would reduce online crimes sharply as simple password would be of no use to the crooks!

If one analyzes its advantages and disadvantages, then its benefits clearly outweighs it cons. Firstly, it provides better security and more safety for one’s money. As a commentator mentioned:

“It is true that it will not stop fraud but neither do armed guards in bank lobbies stop armed robberies. The point is to make it more difficult to commit the crime. This always means taking the convenience out of a process”

Secondly, any one would prefer security over a little cost. So, hats off for the introduction of two-factor authentication!