Case study: Do you feel uneasy about e-banking?

Despite the increase in the number of Canadians surfing the Internet over the last few years, there are still many people who have strong reservations about e-banking (electronic banking) and e-commerce (purchasing goods and services online). The reason for this is often because people feel insecure about entering their personal information into such a publicly accessible tool as the World Wide Web (WWW). Strangely, however, many of these same people have no hesitations about sending e-mail messages containing personal or confidential information.

In this case study, we will examine data on differing types of Internet activity and predict how these numbers will change in the near future. We will consider some of the security measures used to prevent unlawful access to personal information, as well as take a look at the tools used to make the transfer of confidential information both safe and secure. A closer examination and understanding of these security measures might encourage more people to use the Internet for the purpose of financial transactions.

Exercise 1 – Average household percentage of Internet users

1. Based on your own personal experience and that of your family and friends, estimate the percentage of Canadian households who use the Internet for the purpose of e-mail messaging, e-banking or e-commerce. Keep a record of your estimates.
   
   
2. Find the data for 'Household Internet use at home by Internet activity' by clicking on Summary Tables on the left bar of the Home page and searching for 'Internet', and record them in Table 1. Compare the released data for the latest year with your estimates. Were your estimates correct?
   
   

   Table 1: Average household percentage of Internet use

   Year	E-mail messaging	Electronic banking	Purchasing goods and services

3. Using the information from Table 1, create line graphs for each of three purposes listed.

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Exercise 2 – E-mail growth world-wide

Table 1 reveals that the percentage of households where the Internet is being used for e-mail purposes is rising. In a few years time, this percentage will hit close to the 100% mark for "regular home users" and it will not be surprising if everyone with Internet access uses the Web to send and receive e-mail messages.

1. Using your graph showing the percentage of Canadian households who use Internet access for e-mail purposes, research comparable data for other countries and include these figures in your graph.
   
   The following is a list of websites that might be helpful in your research:
   • National statistics offices
   • International statistical organizations
2. Where might you go to verify the accuracy of your graph? Your graph will compare how quickly Canada and other countries are becoming accustomed to using the Internet for e-mail purposes.

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Exercise 3 – E-banking and e-commerce

With the results available, it is difficult to describe with certainty the percentage of households that use the Internet for the purposes of e-banking or e-commerce.

1. Under the assumption that the growth of e-banking and e-commerce is linear, find the regression equation (line of the best fit) for both sets of data. Use these equations to determine when the percentage for both types of Internet use will first surpass the 50% mark.
   
   
2. For the purpose of this question, assume that anyone who buys goods online, also uses e-banking, but not necessarily the other way around. Notice that in recent years, there has been a fairly consistent gap between those who e-bank and those who purchase goods online.
   
   1. Do the regression equations found in Exercise 3, part 1) indicate that this gap will remain at around 11% over the next few years? Do you think that at some point, those who e-bank will eventually begin shopping online?
      
      
   2. In general, do you agree that people feel more comfortable using the Internet for electronic banking than for online shopping?
      
      
   3. If they do, does this add credibility to the assumption made in Exercise 3, part 2) concerning online shoppers who also bank electronically?
3. Many banks are beginning to charge higher fees for customers who prefer to do their banking in person. At the same time, these institutions are cutting back on the number of bank tellers available.
   
   
4. How might these changes affect the percentage of people who bank or shop online?
   
   
5. What other factors or events might have a profound influence on the percentage of these Internet users?

Security measures

Security concerns are one of the main reasons why some people do not use the Internet for electronic banking or online shopping. As noted earlier, this is ironic because some of these people seem to have no reservations about sending confidential information via e-mail. There seems to be a belief that e-mail messages are more secure than online financial transactions: this is the viewpoint that certainly appears to be flawed. But this does raise an interesting question—how do organizations prevent criminals from accessing confidential information such as credit card and bank account numbers?

Businesses, banks and government organizations use numerous methods to protect their clients' personal information. Some of these methods include computer virus monitoring equipment, backup information systems and firewall (one-way access to the Internet) installation. All of these security measures are considered effective ways of blocking unauthorized access, electronic viruses and denial-of-service attacks on a computer network. Another security practice that is commonly used is data encryption. This method uses cryptography, the study of secret codes and ciphers, to hide information by creating mathematical codes.

Exercise 4 — Cryptography

Research some of the methods that are used to ensure Internet security. For example, examine how crytography uses prime numbers to keep data safe and secure.

We recommend reading a book entitled In Code: A Mathematical Journey (Workman Publishing, 2001). This book was written by Sarah Flannery, a 16-year-old student from Ireland, and her father, David Flannery. In it, Sarah tells the story of how she fell in love with mathematics and gives a detailed account of her research into cryptography. She also explains the theories and procedures of the new algorithm she developed for data encryption of electronic communications. For more information about In Code and Sarah's work, visit the following websites:

• Mathematica and the Science of Secrecy
• Early History of Cryptology

Tip! If you are interested in finding additional information about cryptolography, try searching the Internet using the keyword "RSA 129".