Is Online Banking Safe? How to Boost Your Banking Security in Canada

Digital financial management is now part of everyday life with 87% of Canadians saying they used online banking in 2024.  With the platform providing convenience and accessibility, it’s no wonder so many people rely on it.

While it doesn’t take much to buy into the idea of online banking, you may still have questions about the safety of the platform. Concerns about fraud, hacking, and unauthorized access are common. Not to mention reasonable. When you use these online banking platforms to monitor your hard-earned money, it's important that you know your information is secure. Luckily, in Canada, online banking comes with multiple layers of protection. In this guide, we’ll review how banks protect their online systems, common risks to watch out for and practical steps you can take to keep your money safe.

How Banks Protect Your Online Banking

Just as credit cards use security features, so does your online banking. In fact, banks and credit unions in Canada use multiple layers of security to protect your information, whether you bank in person or online. For example, financial institutions require a password in order to log in to your account. Increasingly, though, they are also using a two-step verification process, which sends a code to your phone or authentication app when someone tries to access your account. The bank may even ask you an additional security question.  Regardless of the specifics, the extra layers of security help ensure you are the one who is actually signing into the account.

Behind the scenes, banks rely on encryption and secure data transmission to protect your information as it moves between their system and your device. They also have fraud monitoring tools to flag unusual activity. This includes systems that watch for unfamiliar logins or transactions that fall outside of your normal spending patterns. If something looks suspicious, the bank may lock your account until they can verify the activity. 

Canadian banks also have consumer protection obligations, including the requirement to investigate unauthorized transactions and work with customers to resolve potential fraud quickly.

What Happens If There’s Fraud on Your Account?

Even with the utmost care, fraudulent activity can occur in your bank accounts. This is why it’s important to monitor your accounts for unauthorized transactions. If you notice something suspicious, contact your bank as soon as possible to report the issue. Prompt reporting helps to limit losses and allows the bank to begin their investigation immediately.

Once you report suspicious activity, your bank will review the transaction and determine whether it was authorized. They may also temporarily restrict access to your account or card while the investigation is underway. If this happens to you, stay calm and remember that the Government of Canada states “you will not be held responsible for transactions you didn’t make or approve” provided you “took the necessary precautions to safeguard your account information.”

Common Online Banking Risks to Be Aware Of

Like anything, online banking is not completely risk-free. Despite strong security measures, many issues arise because of the end user. For example, it’s possible you get tricked into giving away information. Or you may use your online banking over an unsecured Wi-Fi network, allowing someone else to gain access to your accounts. Understanding the possible risks helps you spot these attempts and take action before any real damage occurs.

Watch for:

• Phishing emails and fake bank messages. Scammers can pose as your bank, sending you emails, texts, or even calling you. They can then urge you to click links or share login details. These messages can look convincing but ultimately they will result in stolen information.
• Password reuse and compromised credentials. Using the same password across multiple websites increases your risk. If one site has a breach, attackers may try those credentials on your online banking.
• Public Wi-Fi and unsecured networks. If you log into your online banking over a public Wi-Fi connection, you may inadvertently increase the risk of interception, in turn putting your accounts at risk.
• Malware and infected devices. Malicious software on computers (or phones) can record keystrokes or access saved information without your knowledge.
• Social engineering and impersonation scams. Fraudsters may pressure you into sending money or sharing details by pretending to be a bank employee or a government agency. They may also try to trick you into thinking they are a close family member, knowing it is difficult to resist helping those we love.

Recognizing these risks is only part of staying safe. The other half is understanding what you can do to protect yourself online.

Tips to Stay Safe When Using Online Banking

An online banking platform may be safe in theory, but there are a few extra steps you can take:

• Use a strong, unique password (it’s best to avoid using the same password across websites)
• Enable two-factor authentication whenever it’s available
• Set up alerts for logins, transfers, and large transactions, helping you spot (then report) fraudulent activity immediately
• Avoid accessing your online banking over public Wi-Fi networks
• Review your account statements each month, looking for any unauthorized account activity

Takeaway

Online banking is secure, with multiple layers of protection built in by banks. But no platform is completely risk-free. In the case of online banking, threats can come from phishing attempts, credential theft or other scams rather than failures in the banking system itself.

Understanding common risks and adopting simple habits can significantly reduce your exposure. For example, use strong, unique passwords, set up alerts, and avoid connecting to unsecured Wi-Fi networks. If something looks suspicious, report it to your bank immediately. In the meantime, with the right precautions in place, you can use your online banking confidently while keeping your financial information safe.