When you use financial software you want to know that it’s secure, especially if you’re providing bank account passwords so that the application can track your income and expenses automatically. The good news is that many of these financial software companies are very serious about security, and your information is probably protected. Personal Capital is one of them.
“It’s safer for you to look at your bank account information through Personal Capital than it is to log into online banking,” says Fritz Robbins, the CTO of Personal Capital.
Robbins is an expert coder and knows architecture and security. He recently spoke with me about online financial security, how personal finance software makers protect consumers and steps you can take to reduce the chances that your information will be compromised.
What Does Personal Finance Software Do?
One of the first things to consider is what your personal finance software does on your behalf. Some applications, like Personal Capital, just allow you to look at your accounts and analyze your financial situation.
“We manage security to some degree by eliminating the types of things you can do in our application,” Robbins says. “Even if someone’s Personal Capital account is compromised, the hacker can’t go and move money out of these accounts.”
Pay attention to the types of activities your personal finance software engages in. Programs that allow you to manage your money might offer a bigger risk than applications that simply provide you with information about your various accounts.
Another layer of security relates to how your passwords are managed when a personal finance software application uses them to pull information from credit card, bank, and investment accounts. “We never send information to the user’s browser,” explains Robbins. “That’s a big protection for banking passwords. Even if your own computer is compromised, the banking passwords aren’t going to be exposed.”
Robbins explains that when you connect your accounts to the personal finance software your passwords are encrypted and stored in secure data centers. “We use Yodlee for data collection and management. It’s very solid security footing,” he says. “Most people’s browsers are vulnerable. Your laptop is less secure than a data center.”
Personal Capital isn’t the only personal finance software that places a high priority on security. Robbins says that many software packages use standard best practices encryption, including internal encryption and strong perimeter protection.
Check the breach policies of programs you plan to use. “We have a lot of monitors,” Robbins continues. “If alerted to any potential problem, it goes to our chief security office, who will initiate a response. We have not had — to date — any breaches where we have had a loss of end user or client data. If this ever happened, though, our clients would be notified immediately.”
Protect Your Financial Information Online
You can’t completely prevent data breaches and stolen information. However, there are some steps you can take to protect yourself and reduce the chances that someone will destroy your finances by getting access to your online accounts.
First of all, one of the best things you can do is view your account information with the help of financial software, rather than repeatedly going to your bank’s site.
“If you go to the bank website and type in your password, and there is malware on your computer, or you’ve clicked on a phishing site, you’ve given away valuable information,” Robbins points out. “There are plenty of vulnerabilities there. Even a sophisticated consumer can be subject to malware or be fooled by a phishing scam.”
You can use your connected personal finance software to view transactions and watch for fraud. “Monitor your accounts regularly to identify account activity you did not perform,” suggests Robbins. “Consider opting-in to a transaction monitoring email service, which will show all transactions across accounts for the previous day.”
If you do see something suspicious, that’s the time to alert your institution know and immediately change the passwords on your accounts.
Monitor and Change Your Passwords Often
Robbins also recommends creating strong passwords for various sites. He says that it’s best to use different passwords for different sites, rather than using the same login information for multiple sites. “Hackers that get the information for one account can try that same combination on other sites with a reasonable chance of success because so many consumers use the same passwords for all their financial accounts,” Robbins says.
He also cautions against using passwords that connect back to your life or your interests. They may be easier to remember, but they are also easier to crack.
“Use packages that alert you if you go to an unsafe site,” Robbins continues. “Antivirus stuff isn’t 100 percent protection, but it knocks down a lot of attacks. Turn it on and pay attention.”
Finally, Robbins suggests opting for two-factor authentication when possible. This makes it harder for thieves to break through since it requires an extra step. However, Robbins insists that the extra step isn’t too obtrusive.
Usually, it’s something as simple as having an extra code sent to your smartphone. “Two-factor authentication greatly strengthens your security posture,” he says. “Encourage your service providers to adopt it if they don’t already use it.”
If you’ve been holding off on connecting your accounts through any personal finance software because of security concerns, it might be worth it to reconsider, especially if you won’t be using the software to transfer money or engage in other transactions. According to a technology specialist, your data is probably safe.
Readers: How do you feel about connecting your bank account to personal finance software?