For Your Own Good?

Is the ability to market and cross-sell a matter of life or death? Does insight into customer preferences guarantee survival? Can business intelligence provide a strategic weapon against adversaries? While most banking executives would acknowledge that these matters factor into a financial institution's ability to succeed, it's unlikely they would elevate them to matter-of-existence status except metaphorically.

However, my penchant for hyperbole has been fueled by recent evidence that since Sept. 11, 2001, the U.S. government has obtained access to the telephone records of millions of customers -- all in the name of national security. As I learned more about the National Security Agency's warrantless surveillance program, I began wondering why banks have to deal with so many restrictions when it comes to something as innocent as trying to up-sell a customer to a new card offering or investment product -- an action that typically would be based on analysis of previous transactions, account history and relationships within the bank, as well as outreach via a mix of channels including the Web and e-mail -- while all Uncle Sam has to do is lean on a phone company to get the information it wants.

Then again, thanks to the PATRIOT Act and related legislation, banks and other financial institutions already are players in the government's efforts to track and act on money-laundering and other financial transactions that could fund terrorist activities. In fact, this was one of the few aspects of the administration's war on terror that got high marks from the now-disbanded 9/11 Commission (see related article in the January 2006 issue of BS&T, available online at www.banktech.com/security). But I don't think the effectiveness of the financial services industry's efforts is what inspired the NSA to collect consumers' phone records; rather, it's all part of a "multichannel" approach to improving security and combating terrorism.

Priorities, perceptions, values, attitudes, interpretation. What's annoying to me (telemarketing, for example) is a critical part of a bank's marketing strategy. What's an invasion of privacy to you (data mining by a bank or the government, for example) is defense of our basic liberties, according to some officials, or a way to offer you better service, according to a financial services firm.

All I know is that I feel more vulnerable than ever.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio