Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol.

II, (1), pp. 44-53 44

ELECTRONIC BANKING RISKS: CHALLENGES, SECURITY CONCERNS, AND

MITIGATION STRATEGIES

Sara BIXHAKU
M.sC. ,"Eqrem Çabej" University, Gjirokastra, Albania
sarabixhaku@gmail.com, ORCID: 0009-0005-6084-2175

Antoneta POLO
Assoc.Prof.,"Eqrem Çabej" University, Gjirokastra, Albania
neta_polo@yahoo.com, ORCID: 0000-0003-2126-5019

Ilirjana ZYBERI
Assoc. Prof.,"Eqrem Çabej" University, Gjirokastra, Albania
izyberi@yahoo.com, ORCID 0000-0003-0591-1738

Enkela CACA
Assoc. Prof.,"Eqrem Çabej" University, Gjirokastra, Albania
ebabaramo@yahoo.com, ORCID: 0009-0003-8363-9191

Abstract
Electronic banking has transformed the financial industry by offering convenient, fast, and cost-effective
services to consumers and businesses. However, the digitalization of financial transactions also introduces a
range of risks and security concerns. Key challenges include phishing attacks, identity theft, malware, and
system vulnerabilities, which can lead to financial loss and erosion of customer trust. Additionally, the rapid
evolution of technology and increasing regulatory demands pose significant operational hurdles for banks.
This paper explores the major risks associated with electronic banking, highlights the most pressing
cybersecurity threats, and examines both technical and administrative strategies to mitigate them. Rapid
technological development makes the Internet the best way to provide customers with banking services
regardless of time and geographic boundaries. Compared to traditional banking, electronic banking provides
ease, convenience and access to their customers so that they can use the banking site for all types of
transactions in a secure environment. Customers can interact with the banking site 24 hours a day and seven
days a week. Despite the many benefits offered by this service, it remains a double-edged sword and is not
used by every customer, because the growing distance between the bank and customers can lead to a lack of
trust and increased concerns for safety. A particular risk comes with trying to integrate new channels with
existing channels. An important step that banks must take before undertaking any kind of transformation is to
ensure that online banking risk is properly addressed. Addressing e-banking risk includes a number of
measures that banks and users can take to minimize and manage these risks. The purpose of this chapter is to
identify the types of risks associated with electronic banking and to propose some of the main methods for
dealing with these risks. These include multi-factor authentication, data encryption, customer awareness
programs, and robust regulatory compliance. Addressing these challenges requires a holistic approach that
combines technology, policy, and stakeholder collaboration. By strengthening digital security infrastructures
and fostering a culture of cyber awareness, financial institutions can better protect their systems and
customers in an increasingly digital financial ecosystem.
Keywords: operational risk, interest rate risk, transaction risk, reputation risk, strategic risk

JEL Classification: G21, D14

Citation:
Bixhaku S., Polo A., Zyberi I., Caca E., 2025. “Electronic banking risks: Challenges, security concerns, and
mitigation strategies”, Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53
45 Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53

1. Introduction
Perceived risk has long been an important factor influencing customers' decision-making when purchasing
products or consuming services. This concept becomes particularly important in the context of electronic
banking, where the use of technology is often perceived as an uncertain and complicated process. According
to various studies, including those by Mitchell [1] and Davidow [2], customers often face ambiguity and
uncertainty due to the nature of technology, which brings new and unfamiliar stimuli.
When they decide to use electronic banking, customers are exposed to various risks, such as the availability
of services, their performance and security. This perception of risk is supported by empirical research, such
as those of Ho and Ng [3] and Lockett and Littler [4], which confirm that the use of electronic banking
systems is closely related to the sense of risk.
In this context, operational risk, credit risk, interest rate, liquidity, price, exchange rate and transaction risk
are among the main risks that banks and their customers encounter in electronic services. These risks have a
significant impact not only on the operation of banks, but also on the customers' perception of their safety
and reliability.
The paper explores these aspects of risk in electronic banking, analyzing the main factors that contribute to
them and the impact they have on the performance of financial institutions and the customer experience.
Furthermore, it examines the importance of effectively managing these risks to ensure that banks provide
quality services and maintain their reputation in an increasingly competitive market.

2. Literature review
E-banking is defined as "an online portal through which consumers can perform various types of banking
services ranging from paying bills to making investments" [5]. With the exception of cash withdrawals,
internet banking gives customers access to almost any type of banking transaction at the click of a mouse [6].
Indeed, the use of the Internet as a new alternative channel for the distribution of financial services has
become a competitive necessity instead of just a way to achieve competitive advantage with the advent of
globalization and fierce competition [7, 8].
Banks use online banking as one of the cheapest channels of providing banking products [5]. Such a service
also saves time and money of the bank with an added benefit of minimizing the possibility of bank teller
errors [9]. Wise and Ali [10] argued that many banks in their country want to invest in ATMs to reduce the
cost of branches since customers prefer to use them instead of using a branch to do business. The financial
impact of ATMs is a marginal increase in fee income significantly offset by the cost of a significant increase
in the number of customer transactions. The increase translates into improved customer loyalty leading to
customer retention and increasing the value of the organization. E-banking is a lower cost delivery channel
and a way to increase sales. Karjaluoto et al. [11] argued that "electronic banking is no longer limited by
time and geography. Customers worldwide have relatively easy access to their accounts, 24 hours a day and
seven days a week". The author further argued that, with online banking, customers who used to think that
bank branches take too much time and effort are now able to transact at the click of their fingers. Robinson
[12] believes that offering Internet banking services enables banks to establish and expand their relationships
with customers. There are many other advantages for banks offered by online banking such as, mass
customization for each user, innovation of new products and services, more effective marketing and
communication at lower cost [13], development of non-core products such as insurance and stock production
as an expansion strategy, improving market image, better and faster response to market evolution [9].
Stewart [14] asserted that despite the advantages of e-banking there is a possibility of its failure and this is
mainly attributed to the lack of trust of consumers towards electronic channels. There are several other
theories about customer behavior that can explain the rate of adoption and acceptance of e-banking.
Interesting is the study of Doll [15], who also claimed that the content of product information in the design
and presentation of the web are also important factors that affect customer satisfaction.
Mattila and Mattila [16] also asserted that security has been widely recognized as one of the main barriers to
Internet adoption and it depends on the availability of Internet service and a number of other social and
psychological factors. In the banking industry, customer-bank-corporate relationships remain a key issue
where businesses invest to maintain a higher competitive edge in the market [17]. The relationship between
banks and corporate clients is the most important factor in the success of new financial services. In
conclusion, several empirical studies have examined the impact of internationalization and corporate e-
banking on firm performance [18].
Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53 46

The growing popularity of e-banking has drawn attention to legal and illegal online banking practices.
Criminals focus on stealing a user's online banking credentials because the username and password
combination is relatively easy to obtain and then relatively easy to use fraudulently to access a bank account
in internet and to commit financial fraud. To notify users, many banking sites are now including Security
Indicators (Si) on their sites. Hua, Guangying [19] conducted an experiment to investigate how users'
perception of online banking is affected by the perceived ease of use of the Internet and the privacy policies
provided by the Internet banking website. In this study, he also examined the relative importance of
perceived ease of use, privacy, and security. Perceived ease of use is of lesser importance than privacy and
security. Security is the most important factor influencing user adoption. A particular risk arises with the
attempt to integrate new channels with existing channels [20].
Slowly but steadily, bank customers are moving towards internet banking. An important step that banks must
take before undertaking any kind of transformation is to ensure that online banking risk is properly
addressed. This is very difficult for both customers and banks to determine the best way to use online
banking. Also trust plays a very important role. It is very difficult to analyze trust as a phenomenon and it
can be almost impossible to analyze trust in the context of e-commerce because of the complexity and risk of
e-commerce. Trust will be the deciding factor for the success or failure of e-banking.

3. The risks associated with electronic banking

Customers perceive greater risks when performing services than when purchasing tangible goods [21].
Zeithaml [22] sees services as riskier than products because services are intangible, non-standardized, and
often sold without warranty. Customers can rarely return a service they have already consumed to the service
provider moreover some services are so technical or so specialized that customers have neither the
knowledge nor the experience to assess whether they are satisfied, even after they have consumed the service
[1].
Perceived risk has been considered as an important feature that affects the decision-making process of
customers when they buy a product or consume some services [1]. Electronic banking is a channel that uses
technology and customers perceive the use of banking electronic as a risky decision because services that
apply technology present unknown and ambiguous incentives [2]. Therefore, when customers decide to use
electronic banking, they are exposed to uncertainties such as the availability, compliance, and performance
of electronic banking channels [23].
Ho&Ng [3] and Lockett&Littler [4] empirically support the fact that the use of the electronic banking system
is associated with risk. Davidow, W. H. [2], suggested that customers perceive the existence of risk as
present in the use of electronic banking services. Similarly, Sarin, S., Sego, T., and Chanvarasuth, N. [23]
identified risk as an important characteristic of electronic banking.

3.1 Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, systems and people,
or external events and actions. As a result, the bank is unable to offer high quality products and services.
Risk is present in every product or
Operational risk is the risk of loss resulting from inadequate or failed internal processes, systems and people,
or external events and actions. As a result, the bank is unable to offer high quality products and services.
Risk is present in every product or service offered. The level of risk is a consequence of the structure of the
institution as well as the surrounding environment. Also, the risk will be determined by the nature and
complexity of the products and services offered. Systems, processes and technology on which all these
products rely will be the main indicator of the level of risk to which the institution is exposed.
Banks face three types of operational risk:
Prediction the volume of transactions
Information System Management
Transfer, delegation (outsourcing)

3.1.1 Forecasting the volume of transactions

Forecasting the volume of transactions is difficult, therefore one of the biggest challenges that banks
operating through the Internet will face is predicting the number of customers and the volume of transactions
they will face. Experience has shown that many of the banks that offer electronic services have made a bad
forecast of the volume and of course in such a case the bank may face financial and reputational damages
and often compromises in terms of security as often to cope with the excessive demand they implement
47 Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53

inappropriate and previously untested systems. In order to avoid this category of risk as much as possible,
banks should:
do occasional market research
implement database systems that ensure sufficient and flexible capacities to cope with changes in
demand
undertake promotional campaigns and
Ensure sufficient staff and development of a suitable business plan

3.1.2 Information System Management

The second type of operational risk that accompanies e-banking is related to the management of the
information system. Banks may face the difficulty of an adequate information management to monitor the
electronic services they provide as there may be difficulties in configuring a new system that will provide the
generated information. So it is necessary that the information generated is complete and available in
understandable formats.
3.1.3 Transfer, delegation (outsourcing)
Recently a significant number of banks delegate some related business functions such as security. This is
done for cost reduction purposes, but also due to the fact that the bank lacks sufficient expertise to provide it
on its own. Transfer is an important function which can create material risks by potentially reducing the
bank's control ability over security. Of course, the delegation of functions is not something new, nor is it
uncontrollable, but banks should be more careful about the risks that accompany it.
Operational risk is a consequence of inefficient internal procedures and systems. Also, losses caused due to
human errors or technical errors can lead to significant amounts of losses and are included in this category,
intentional damage to computer systems (hacking damage), theft of information, etc. The problem with these
types of risks lies in the fact that it is quite difficult to assess and quantify them. Since the 1990s, the
financial sector has experienced losses exceeding $100 billion estimated as a result of operational losses. In
addition, banks must assess all operational risks across products, activities, processes and systems. Banks
identify and assess operational risk in all relevant products, activities, processes and their systems. Banks, in
order to effectively identify operational risk, consider both internal factors (such as the entity's structure,
nature of activities, the quality of human resources, organizational changes and employee turnover) and
external factors (such as changes in the industry and technological advances) that may adversely affect the
achievement of the bank's objectives.
Also, banks must ensure that any new product, activity, process or system goes through an operational risk
assessment process before being put into operation. They should build a system for continuous monitoring of
risk profiles and loss exposures. There should be a continuous reporting of information related to the issue of
risk analysis in order to take preventive measures in a timely and appropriate manner. Banks should also
have appropriate policies, processes and procedures for controlling and mitigating operational risks identified
during the risk analysis process. These procedures should be reviewed on an ongoing basis so that risk
assessments are always up-to-date. It is also very important for banks to have contingency plans and business
continuity plans (BCP: Business Continuity Plan) in place in order to ensure business continuity capability in
the event of a crisis or an event that would affect the serious way in the good functioning of all bank
processes.

3.2 Risk related to the operational system

With the invention of the electronic "space", a new phenomenon called Electronic Crime appeared.
Computer systems or the Internet can be thought of simply as instruments used to carry out well-known
criminal acts such as theft, fraud, etc. The birth of the computer and in particular the Internet created entirely
new spaces in the market economy and enabled the rapid movement of information within and outside the
borders of the European Union. But the Internet brought with it many other negative phenomena related to
the creation of new opportunities and spaces to commit fraud and theft using this new technology. Through
special equipment and in-depth knowledge in this field, many people managed to interfere with electronic
systems and perform unauthorized transactions for financial gain. This situation led to the issuing of new
laws which aimed to regulate all these new phenomena.
In a communication from the European Commission, the term electronic crime refers to three categories.
The first category includes types of traditional crimes such as fraud or theft but always committed through
the use of computer systems.
1. Fraud: Knowingly telling or telling false facts or events as if they were true for the purpose of financial
gain.
Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53 48

2. Identity Theft: Identity theft means stealing someone else's identity information (such as the personal
number on credit cards). As in the case of fraud, identity theft is done to help commit other crimes such as
stealing bank accounts, paying for various purchases on the Internet, etc.
The second category includes the publication of illegal content on the Internet
The third category includes new types of crimes that are committed precisely as a result of the development
of new technologies such as computers and the Internet. Examples of these crimes are:
Spamming - These are advertisements that appear automatically during normal browsing on the Internet or
various e-mails that may come to our e-mail address that have an advertising content.
Hacking - Hackers are individuals who possess special computer skills and who manage to intervene inside
systems, computer programs or websites by discovering and exploiting the cracks that may be in their
security systems.
Malware - Is a category of harmful programs that include viruses, logic/time bomb/Trojan horse, sniffer
programs, denial of service attacks, data manipulation, Web spoofing, and Web site defacements. Generally
these are carried out by anonymous individuals who can mask their IP addresses, and use someone else's
identity.
Investigating such matters is almost impossible, and requires the most trained computer experts who are
usually hackers employed by the state itself.

3.3 Credit risk

Credit risk is the case when the client does not pay the obligations to the bank, according to the contract he
signed with him. Through the Internet, the bank does not personally contact customers who apply for loans.
Therefore, this constitutes a challenge for the bank to verify the "authenticity" of the client.
In general, the credit risk of a financial institution is not increased by the fact that the loan originates from an
e-banking channel. However, management must take additional precautions when approving loans
electronically, including ensuring management information systems are effectively in place to track portfolio
performance originating from e-banking channels. Credit risks may increase in the future if the relationship
with customers becomes more distant and transient, and if banks do not pay attention to credit standards due
to competitive pressures.
The following aspects of online loan origination and approval tend to make the credit risk management
process more challenging. If these aspects are not managed properly, the credit risk can increase
significantly.
• Verification of the client's identity for online credit applications and the execution of a binding contract;
• Monitoring and control of the growth, prices and continuous quality of the loan created through e-
banking channels;
• Collateral evaluation and collateral refinement over a wide potential geographic area;
• Collection of loan payments from individuals over a potentially wider geographical area; AND
• Monitoring of any increase in volume, and possible concentration outside the lending area.

3.4 Interest rate risk

Interest rate risk is the result of interest rate fluctuations. From an economic point of view, a bank focuses on
the sensitivity of assets, liabilities and income to changes in interest rates.
Interest rate risk is caused by:
•differences between the moment of interest rate change and the moment of current flows (pricing risk);
•from the change of relations between different interest curves that affect banking activities (basis risk);
•from the change of rate relationships along the spectrum of maturities (yield curve risk);
•from interest rate related options included in banking products (options risk).
The assessment of interest rate risk should take into consideration the impact of complex, illiquid
strategies or products as well as the potential impact that changes in interest rates will have on commission
income. In these situations where trading is managed separately, this refers to structural positions and non-
tradable portfolios.
Electronic banking can attract deposits, loans and other relationships from a larger pool of potential
customers than other forms of marketing. A greater access to customers who primarily demand the best rates
or terms, forces managers to create appropriate asset/liability management systems, including the ability to
quickly adapt to changing market conditions.

3.5 Liquidity risk

Liquidity risk is the risk arising from the bank's inability to repay its obligations and the bank's inability to
manage unplanned changes in financing resources. Online deposits have the potential to attract customers
49 Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53

who focus exclusively on rates. An institution can control this potential volatility and extended geographic
reach through its deposit contracts and open account practices, which may include face-to-face meetings or
the exchange of correspondence.
Internet Banking can increase the volatility of deposits for customers who keep their accounts only based on
rates or terms. Assets/Liabilities and loan portfolio management system should be suitable for products
offered through internet banking. Increased monitoring of liquidity and changes in deposits and loans may be
necessary depending on the volume and nature of accounts opened online.

3.6 Price risk

Price risk is the risk of earnings or capital derived from changes in the value of tradable portfolios of
financial instruments. This type of risk originates from market making, agreements and taking positions in
interest rates, foreign exchange, capital and commodity markets.
Banks may be exposed to price risk if they establish or expand deposit brokerage, loan sales or securitization
programs as a result of electronic banking activities. Appropriate management systems are needed to monitor
measure and manage price risk if assets are actively traded.

3.7 Exchange rate risk

Foreign exchange risk is the case when a loan is disbursed in a currency other than the local currency.
Currency risk can be caused by political, social and economic developments. The consequences can be
unfavorable if the currency becomes subject to frequent exchange rate fluctuations. Banks are exposed to
currency risk if they accept deposits or give loans in currencies other than the local one. Therefore, banks
that use internet banking must install sophisticated systems if they are involved in activities that contain
currency risk.

3.8 Transaction Risk

Transaction risk is the risk arising from an error, fraud or the inability to deliver products and services,
maintain a competitive position and manage information. Transaction risk is evident in every product and
service offered as well as in the internal banking control system.
A high level of transaction risk can also exist in internet banking products, especially in those
products/services that are not well planned, implemented and monitored. Banks that offer financial products
and services via the Internet must be able to meet consumer expectations. Banks also need to ensure that they
have the right product, the capacity to deliver it quickly and on time, and the provision of reliable services to
enhance reputational trust.
Attacks or interventions in the network of the banking system are one of the main concerns. Studies have
shown that banking systems are more exposed to internal than external attacks. This is because internal users
have knowledge of the system and can access it very easily. Therefore, banks must have protective audit
systems in order to protect Internet banking from external and internal attacks.
The drafting and implementation of the contingency and/or fallback recovery plan is necessary for a bank,
because through this plan the bank ensures that it can offer banking products and services even in
unfavorable circumstances.

3.9 Reputational risk

Reputational risk is the case when laws, rules or ethical standards are broken. This risk exposes the bank to
the payment of fines, penalties, damages and contract cancellations. This risk lowers the bank's reputation.
An institution's decision to offer e-banking services, especially complex transactional services, significantly
increases its level of reputational risk. Some of the ways in which e-banking can affect the institution's
reputation are:
• Loss of trust as a result of unauthorized activity in customer accounts,
• Disclosure or theft of confidential customer information by unauthorized parties (eg, hackers),
• Failure to provide reliable service due to the frequency or duration of service interruptions from
temporary systems failure;
• Consumer complaints regarding difficulties in using e-banking services and the institution's inability to
solve problems.
Risk of damage to the bank's reputation may arise, even if customers do not suffer any actual damage. If a
hacker successfully accesses a bank's website and makes changes, the bank in question may suffer
substantial damage to its reputation even though customer balances are secure and the hacker has not
Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53 50

received any financial benefit. This affects not only the bank in question, but can also undermine confidence
in the security of e-banking in general and therefore slow down development in this area.

3.10 Strategic risk

Before the bank offers an internet banking product, management must consider whether the product and
technology match the banking objectives. Also, the bank should take into account whether the resources are
sufficient and able to identify, monitor and control the risk in internet banking.
Technology experts along with marketing and operations experts should contribute to the planning and
decision-making process for internet banking. New technologies, and in particular the Internet, can lead to
rapid changes in competition. Therefore, the strategic vision should define how a product to be offered on the
Internet is designed, implemented and monitored. The freedom and global reach of the Internet opens the
threat of increased competition from new members who will no longer need a network of branches to operate
effectively in any given market. This competition may have started across national borders. Meanwhile,
existing players are faced with the problem of what to do with the branch networks they have built up over
the years.
Poor investment planning and decisions for e-banking can increase a financial institution's strategic risk. For
this, financial institutions should pay attention to the following problems:
• Suitability of management information systems (SIM) to track the use of e-banking and profitability;
• Costs involved in the creation of e-banking technology;
• Designing, providing, and pricing services appropriate to generate sufficient customer demand;
• Costs and availability of staff to provide technical support for dislevels involving multiple operating
systems, web browsers, and communication devices;
• Competition from other e-banking providers; AND
• Technical suitability, operational, harmony, or marketing support for e-banking products and services.

3.11 Image risk

If a banking institution decides to offer e-banking service, it must take into account that the degree to which
its image is exposed to risk increases due to the complex nature of this service.
Image risk is the actual and anticipated impact on earnings and equity arising from negative public opinion.
This affects the institution's ability to create new relationships or services or to continue existing
relationships. This risk may expose the institution to litigation, financial losses or a decline in the customer
base. Exposure to reputational risk is present throughout the bank and includes the responsibility to exercise
due care in dealing with customers as well as to provide accurate and timely services to the community.
The effects that e-banking can have on the image of the bank:
• Loss of credibility in case of unauthorized actions on the client's account
• Violation of customer privacy (electronic piracy)
• The difference between customer expectations and the level of service provided
• Difficulty of using e-banking
• Leakage of confidential customer information to third parties
• Not providing the service due to frequent interruptions.
• Customer complaints regarding the use of services and the inability of the contact point to respond to
customer questions and uncertainties.
In order to determine what will be the impact of e-banking on traditional banks, the board must assess the
effect on the following areas:
• Strategy
• Level of customer service
• Profits and costs
• Advertising expenses
• Financing cost
• Opportunities and threats
It is noted that none of these risks are completely new and unknown. The sector of the bank that analyzes the
risk treats all the risks mentioned above as risks present in the activity of traditional banks. The difference is
made when e-banking gives a different weight to all these risks. Some of these risks assessed as not very
important in the activity of the traditional bank have a different importance in the e-banking dimension.
Well-designed marketing is a way to educate potential customers and limit image risk. Customers should
understand what they can expect from a product or service as well as what specific risks and benefits are
incurred while using the system. In this way, marketing concepts should be closely coordinated with open
statements. A national bank should not market its electronic banking system based on features or attributes
51 Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53

that the system does not have. The marketing program must present the product accurately and fairly.
National banks should carefully consider how links to third parties are presented on their Web sites.
Hypertext links are often used to enable customers to connect to a third party. These links may represent an
endorsement of third-party products or services in the eyes of customers. It should be made clear to
customers when they leave the bank's Web site, so that there is no confusion about the specific service or
product provider or about the security and confidentiality standards that apply. Likewise, statements must be
made so that customers can distinguish between insured and uninsured products. Parent banks should ensure
that their business continuity plans (BCPs) include the e-banking business. Regular testing of the business
continuity plan, including press and public communications strategies, will help the bank ensure that it can
respond effectively and quickly to adverse customer or media reactions.

3.12 Legal risk

Legal risk has become an important issue in e-banking, and one aspect of this is how any loss from a security
breach should be distributed between banks and their customers. Customers must be responsible for any
security breach or any system problem that is due to negligence on their part, and this must be reflected in
the conclusion of contracts for internet banking services. But if the damage occurred due to system
breakdown, negligence of bank employees, attack by hackers or other parties; the bank should be responsible
to cover the damages.

4. Conclusions
The rapid development of information technology after the 70s of the last century and especially its use in
society in the framework of the technical-scientific revolution could not leave out the banking sector. Every
day it is used more and more by banks to serve customers with speed, convenience, efficiency and at an ever
lower cost. E-banking has become an integral part of modern banking due to lower transaction costs, twenty-
four hour services, increased control over transactions, higher volume of transactions in less time, facilities
remote transactions and a much wider group of banking products and services. But in addition to these
possibilities, e-banking operations increase the different levels of risk for banks. Furthermore, clients who
rely on e-banking services may have a greater lack of tolerance for a system that is unreliable or that does not
provide accurate and current information. Through online services, clients have a greater choice and do not
need to be connected to one financial institution or another. Clearly, the longevity of e-banking depends on
its security, reliability and accountability.
One of the biggest problems with e-banking seems to be the security and protection of information
exchanged between the client and the bank. In fact, banking systems always express concern that the use of
electronic banking may expose banks, customers and their transactions to electronic interception and
possibly fraud interventions. Therefore, banks need to carry out regular risk assessments, keep customers
informed and, possibly, prepare to offer compensation if private information becomes public. For this reason,
all risks related to e-banking will be recognized, addressed and managed by banking institutions in a careful
manner. These risks can be mitigated by adopting a comprehensive risk management program that includes a
sound strategic plan. It is important that the extent of the risk management program in a financial institution
should be proportional to the complexity and sophistication of the activities in which it engages. E-banking
requires new administrative controls and potentially increases the importance of existing controls.
Management should evaluate its administrative controls to maximize the availability and integrity of e-
banking systems. Effective incident response mechanisms are important to minimize operational, legal and
reputational risks arising from unexpected events, including internal and external attacks that may affect the
provision of e-banking systems and services.
New technologies, especially the Internet, can lead to rapid changes in competition. Therefore, the strategic
vision should determine the way a product that will be offered on the Internet is designed, implemented and
monitored. The freedom and global reach of the Internet opens up the threat of increased competition from
new members who will not need a network of branches to operate effectively in any given market. Poor
investment planning and decisions for e-banking can increase the strategic risk of a financial institution. For
this, financial institutions should pay attention to the problems of continuous investments in IT. Electronic
(cyber) crime, which is getting stronger every day, is today a phenomenon that also accompanies electronic
banking, therefore, to protect against it, continuous cooperation with the information technology bodies, as
well as those specialized for the fight against cybercrime. The information technology systems designed for
electronic banking must be audited continuously, giving constant importance to their audit, why not also
using hackers to prove its stability against attacks of any kind. Continuous cooperation with the Bank of
Bixhaku S., Polo A., Zyberi I., Caca E., Sustainable Regional Development Scientific Journal, Vol. II, (1), pp. 44-53 52

Albania, as the highest specialized and independent regulatory entity in the banking system, is a continuous
necessity for electronic banking as a whole.

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