Privacy? Bank on it

Sooner or later we will have to deal with tighter privacy regulations. Our companies will have to convince customers that their personal data will be safe. That means safe from unauthorised use, but also safe from crackers and catastrophes.

Remember the Y2k sermon? Back in 1999, the American Bankers Association wrote a sermon for preachers to deliver, telling the people in the pews not to panic over Y2k and to trust their bankers.

(As bad ideas go, this one was a lulu I never found one minister who even thought a sermon written by bankers was a good idea, much less one willing to deliver it.)

Now a lobbying group backed by the ABA is claiming that data privacy will cost bank customers billions of dollars and hundreds of millions of hours of wasted time every year. This time, the bankers didn't try to turn preachers into their mouthpieces. Instead, the Financial Services Coordinating Council sponsored a study by banker-friendly Ernst & Young.

The study's breathless conclusion? Based on responses from 90 large financial-services organisations, Ernst & Young says it will cost US customers at least $US16 billion and 305 million hours per year if the law requires customers to opt in for data sharing and if less than 10% agree to opt in.

Did you spot the jokers in this deck? Let's put it another way: If more than 90% of Americans think banks sharing their confidential data is a lousy idea, it will cost them each 12 seconds and 17 cents a day to do without it.

That's the price of privacy at the bank: less than 20 cents a day. Not a very compelling argument to agree to data sharing, eh?

If you think this is just a problem for bankers, think again. Yes, new data privacy regulations for US banks kick in July 1. But the clock is ticking for the rest of us, too. Sooner or later, we will have to deal with tighter privacy regulations, whether because of proposed federal or state laws or European requirements for dealing with customers across the water.

And we (or rather, our companies' marketing departments) will never persuade customers to share their data just to save pennies a day. We'll have to promise a lot more and every marketing promise means lots of work for IT.

Security, for example: Our companies will have to convince customers that their personal data will be safe, whether they opt in or out. That means safe from unauthorised use, but also safe from crackers and catastrophes.

For IT, that means security holes have to be closed immediately and software patches must be applied pronto. But it also means tightening up data access policies that have been getting looser ever since our first departmental and client/server systems were plugged in.

And flexibility: We'll have to let customers choose how much of their data will be shared. It's a lot easier to sell a little data sharing than a full boat. But in the IT shop, that will require more processing power to constantly filter data and lots of tweaks to enterprise applications to support that customised data handling.

And customers will have to see real advantages to sharing their data not pennies or seconds saved, but new products and services that better meet their needs at a lower price. How will that happen exactly? That's for the business guys to dream up. But you can bet IT will have to make it happen, and fast. If we don't make losing privacy worth it for customers, they'll just say no.

Of course, maybe we'll all be a little luckier. Maybe the bankers' guesstimate of 10% opt-in is just a little paranoid. Maybe most of our customers will be glad to share their data.

But don't count on it. Faced with everything from spam to identity theft, lots of people are plenty sensitive about privacy these days. So when it comes to data sharing, we probably won't be preaching to the converted.

Hayes, Computerworld US' senior news columnist, has covered IT for more than 20 years. Send email to Frank Hayes.

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