SINGAPORE banks, like their global counterparts, are stepping up efforts to improve online security to protect their business - and give them an edge over rivals.

Mr David Sayer, global head of banking for consultant KPMG, said top banking executives here and elsewhere are very concerned about IT security breaches affecting their business.

He told The Straits Times at KPMG's Singapore office yesterday: "It's the most rapidly growing area in banking in terms of costs and expectations."

Mr Sayer pointed out that KPMG hires "hundreds of people around the world every year" for its fast-expanding banking consultancy business.

One reason lenders are willing to splash out to build up their defence capabilities against cyber threats is the extremely high opportunity cost of not doing so.

"The more cyber attacks we see and the more publicity about them, the more customers will reward a bank that demonstrates that it's got better cyber security," Mr Sayer said.

He cited the example of Spanish financial institution Bankinter, which introduced a retinal scanning application on a smartphone.

The application identifies the customer through a biometric iris recognition system before he can access banking services.

Mr Sayer noted that the innovation helped the lender to attract around 100,000 new customers, underscoring the demand for secured banking services.

He also urged banks to adopt a multi-faceted approach in dealing with the problem of cyber threats instead of leaving it just to their IT security departments.

For example, the human resources department has to hire the right people and monitor staff to ensure they are not accessing private client information.

Banks must also know their customers well enough to identify when a potential fraudulent activity is taking place.

Mr Sayer himself had a close shave six months ago when his credit card was replicated by a criminal who tried to buy £20,000 (S$42,460) worth of diamonds in Geneva when he was far away in New York.

Thankfully, his British bank noticed it was an unusual transaction, called him, confirmed it was a fraudulent transaction and prevented it from going through.

Security at Singapore banks is comparable to that of American and British lenders, which are the top of the class, said Mr Sayer.

But he cautioned lenders here against resting on their laurels.

"One of the dangers is that you become complacent, precisely because you have less crime here."