FSA urges online banks to put security first

The Financial Services Authority (FSA) has blasted online banks for tempting a breakdown in security by overloading their web servers with too many customers.

The criticism comes less than a week after Abbey National's cahoot.com suffered such a security breach.

The chairman of the FSA, Sir Howard Davies, said many online banks have miscalculated their system capacity and therefore compromised security.

Graham Titterington, senior consultant from research firm Ovum told silicon.com that cahoot.com's system crash was technically similar to the denial of service hacker attacks that brought down major sites in February such as e-bay, Yahoo! and Amazon.com.

"The accidental overloading of any IT system poses serious security risk and makes the company vulnerable. cahoot.com could have predicted the volume of people trying to get online and subsequently prevented the site from collapsing," he said.

David Birch, the director of Hyperion consultancy said that some online banking ventures are dangerously naive when it comes to technology.

"Internet banking is still an experimental arena and configuring a website takes experience. cahoot.com did not have enough technical knowledge on how to run an Internet bank," Birch said.

A spokesman for cahoot.com told silicon.com that customers' security was not at risk, as they did not have any customers registered when the site collapsed.