Before the advent of electronic banking, the use of a paper iou in the form of a check with the payor’s checking account number and hand written signature was sufficient for the bank to diminish the funds in the payor’s checking account. The only danger to the owner of a checking account came from the possibility of another person being able to to perfectly copy the hand written owner’s signature, something very improbable and easy to protect against occurring.
Then came the computer with its ability to perfectly copy the signature of a person. With a picture of the signature of a checking account owner and knowledge of the account number, it became much easier for thieves to do electronic forgery. The question now is, how to minimize this threat. And the answer would appear to be simple.
First, we nust realiaze that in order for the computer to copy a signature it can only do so in graphic mode. So what we need is a non-displayable text mode signature. And with online banking, we already have that non-displayable text mode signature in the form of a password. Therefore, any electronic transaction authorizing a bank to diminsh the funds in a checking account should require the password of the checking account owner. Should a bank fail in providing this security, then it should be held laible for any losses due to its negligence.