banks — Banking.com

FI Spotlight: Pan American Bank

April 19, 2013 By Banking.com Staff 3 Comments

Banks and credit unions are making headway building their own social media presence and with the influence of the Federal Financial Institutions Examination Council (FFIEC) are beginning to determine how their activities fit into company policies. Financial institutions looking to go social have a bevy of resources to learn from, whether listening to webinars from experts, talking with lawyers familiar with the guidelines or hearing from other members of their community.

For our latest FI Spotlight, we touched base with Jesse Torres, President and CEO of Pan American Bank in Los Angeles, California. Jesse recently posted an instructional video for bankers and directors on social media. To learn more, Jesse provided further insight to Banking.com on his experience with social media at Pan American.

Q: You seem to have a great perspective and experience with social media? How did Pan American Bank build its social channels, and what was your general philosophy?

Pan American Bank began using social media in late 2009 in response to the backlash against banks. As a conservative community bank, Pan American Bank never participated in subprime lending and other questionable lending practices. However, due to the broad and sensational messaging delivered by the media, Pan American Bank and other community-focused banks were painted with the same brush as those that violated public trust through questionable lending practices. Social media provided Pan American Bank with the platform to tell its story – one person at a time.

Through social media, the bank has been able to demonstrate its commitment to the community and other stakeholders. Social media is a tremendous tool for “personalizing” the institution and creating a venue for honest and transparent two-way communication.

While Pan American Bank maintains a presence on Twitter, LinkedIn and YouTube, it has chosen to focus the majority of its social media resources on Facebook. Facebook was chosen due to its broad adoption (over 1 billion worldwide users) and its mix of tools (e.g., status updates, video, photos, the ability to create and host events). These factors allow Pan American Bank to maintain an ongoing relationship with stakeholders using information in a variety of formats.

Q: What’s your best piece of advice for a financial institution just beginning to establish their social media presence?

Institutions need to realize that social media is now a regulatory hot button. During the past five years social media has transformed from an emerging technology to a mature technology. Many institutions now believe that it is time to incorporate social media into their strategy – perhaps due to having greater familiarity with the technology or because of competitive pressure. As such, the social media space is becoming increasingly occupied by financial institutions.

Regulators have noticed the growing trend but, until recently, have been unable to focus on social. As the industry recovers and as fewer banks risk failure, regulators are returning to business as usual. Any institution pursuing social media must become adequately familiar with the regulatory expectations – governance, policies and procedures, third party due diligence, training, content monitoring, audit, and board reporting. At a minimum, institutions should address social media through a risk assessment, policy and training.

Q: What’s one unexpected difficulty that banks can prepare for when developing their social media policies?

The main challenge in developing a social media policy is the governance structure. Contrary to what many may believe, social media risk is not a technology risk. It is a human resource risk. The dangers involved with social media do not involve malfunctions of technology or similar events. The dangers arise from employees being poorly trained and unintentionally creating risk for the institution. As such, the governing individual or body should have sufficient influence to require adequate employee training. This fact is many times lost as social media is often assigned to the IT department rather than to a department with broader human resource training capabilities. Ideally, due to social media’s broad impact of an organization (compliance, legal, sales, marketing, information technology, etc.), an appropriate governing structure should include a cross-departmental team.

Q: What do you see as the next trend for financial institutions on social media?

While adoption has increased over the past five years within the banking industry, the recent January 2013 FFIEC draft social media issuance and pending final regulations will slow adoption as the regulatory process works itself out. Once adoption resumes, financial institutions will increase their use of social media as a customer service channel. More progressive institutions, with greater risk appetites, will consider its use in completing financial transactions (think Chirpify). Others may utilize the platform for underwriting, using the social networks as an indicator of credit risk (good credit risks beget, or befriend, good credit risks). However, most institutions will limit its use to community building and brand differentiation due to their conservative nature and the rise of hacking incidents of both bank and social media platforms coupled with regulatory skepticism over the security afforded to bank customers through social media channels.

Want to hear more from Pan American Bank? Follow them on Facebook.

Think your FI deserves special recognition? Submit your FI here.

Filed Under Financial Institution Spotlights Tagged With banks, FFIEC, FI Spotlight, Pan American Bank, policies, social media

Caught Between Custom And Commodity

February 4, 2013 By Banking.com Staff Leave a Comment

At a time when bank branches are disappearing with regularity and there seems to be more consolidation at the corporate level (though that isn’t necessarily the case), the head of the Office of Fair Trading (OFT) in the U.K. has a major problem with the industry. He thinks the market needs more banks.

Speaking to the Parliamentary Commission on Banking Standards late in January, Chief Executive Clive Maxwell didn’t stop there. He stressed that the market needs more banks to make the industry more competitive and focus more closely on the customer. Established institutions, he reported don’t engage customers enough because they don’t need to.

The 40-year-old OFT had its powers expanded in 2002 through an act of Parliament, but even earlier its word carried some weight. That’s why a pronouncement like this sparks an unlikely thought: If the government doesn’t think an industry is being well served by its players, should other players step up? Or is that a sign that they should stay away?

Here’s a different way to look at the same problem. As the plethora of online and mobile services hitting the market every week makes clear, retail banking just ain’t what is used to be.

As we’ve occasionally examined in this space, there are certainly alternative models emerging, but the reality is that the Internet is the great equalizer. The array of tools and apps available from every bank in every geographic market essentially makes it easier for every customer but harder for the bank to create differentiators.

The charge that banks aren’t “engaging” their customers enough is particularly strange in this regard. Isn’t that exactly what the blizzard of technology-enabled services offers? The truth is that mobile apps and other online services, many of which feature more customization and convenience than was ever possible before, represents an unprecedented level of engagement.

Here’s what might be considered the flip side of the equation. A blogger recently wrote about finding an old piggy bank he used to store the dimes he collected in his younger days. The dimes he found amounted to about $30; the piggy bank itself, by his estimate, cost $10. That got him pondering a ‘piggy bank’ test that evaluates the charges each bank’s customers incur, and whether they’re worth the price.

The OFT chief had a lot to say about this aspect too. He speculated that banks sell customers various products they don’t understand or even need, and drive up charges in the process.

There’s no clear bottom line here. Online or otherwise, banks will offer ever-greater customization and convenience, because in a free market, that is exactly what they should do. Services that are ultra-customized are by definition not for everyone, but that doesn’t mean the bank is giving customers services they don’t need. And of course, more banks will mean more services, not less.

We’re in the midst of a groundbreaking transformation for the banking industry. In a sense, we’re caught between two extremes—greater customization for the customer, possible commoditization (perish the thought) for the company. With new APIs and mobile devices coming down the pike, we’re actually going to see a spike in new apps. Some customers will appreciate that, and maybe some regulators possibly won’t.

So how will banks distinguish their offerings? How will customers react to new services giving them capabilities they never thought but like (and will have to pay for)? What will regulators have to say about it?

It should be fun to watch. Stay tuned.

Filed Under For Financial Institutions Tagged With banks, Office of Fair Trading, Parliamentary Commission on Banking Standards, piggy bank

Your Money or Your Bank

January 28, 2013 By Banking.com Staff Leave a Comment

Customers logging into the Citizens Bank site had a problem last week. The online services “were not available at this time,” they were told, and while no reason was given for the outage, it seemed apparent that foul play was involved, specifically a DDoS (Distributed Denial of Service) attack.

This is by no means the only bank to be on the receiving end of such assaults, and Citizens even had more traditional criminal issues to deal with—two of its branches in Philadelphia suffered old-fashioned bank robberies. True to pulp fiction form, one was from a perpetrator wearing a surgical mask, while in the other case the suspect handed a note to the teller demanding money, got away with an unspecified haul and, yes, is “considered armed and dangerous.”) Still, the outage is newsworthy specifically because it captures so many trends of the moment.

First, a spokesperson for the bank politely urged customers to find their way to a local branch—advice that will seem increasingly irrelevant. This has nothing to do with the incidence of bank holdups; it’s simply because the number of branches is dwindling. According to a report from research firm SNL Financial, banks closed 2,267 branches last year while opening only 1,149. That’s the biggest net loss since the firm began tracking closures in 2005.

There’s no single reason for this, of course. The economy at large, competitive factors, government regulation, shifting interest rates, internal priorities—they are all factors in any given trend. However, as even the new report makes clear, many financial institutions are encouraging their customers to move to online and mobile banking.

Which brings us back full circle to the issue of online outages, and the most recent problems in that area.

Any news search at any given time yields a plethora of stories about banks launching new initiatives in the online/mobile space. There are always deals being offered to draw new business, mobile apps developed and released to the market (both consumer and business) and significant investments being made. For everything from infrastructure to customer convenience, this is where the action is right now.

In this context, even a minor outage can be devastating. Customer loyalty can be extremely fickle: Just as retailers have found that the unavailability of a single item can mean the loss of a customer forever (since there are so many alternatives available at the click of a button), banks may find that patrons will go elsewhere because it’s easy to do.

Even the best security measures cannot guarantee that there will never be a data breach. DDoS attacks of the kind apparently experienced by Citizens Bank—which create enormous amounts of fake traffic to a targeted site, temporarily crashing servers and weakening defense—will likely gain in popularity. Customers don’t know or care what the problem is; they’ll know there is one and take their business elsewhere, and tell their friends to do the same (not just through word of mouth but also widely disseminated social media).

In essence, the ROI of any investment in online and mobile banking must involve more than the sum of its parts. There will always be online attacks and outages. The differentiator might be in how the affected financial institution deals with it.

Filed Under For Financial Institutions Tagged With banks, brick & mortar branches, Citizens Bank, DDoS, Distributed Denial of Service, outage

Banks: Games People Play

January 23, 2013 By Banking.com Staff Leave a Comment

If you want to see how much technology has changed the relationship between banks and their customers, then take a trip down to the Berkshire Bank branch in Pittsfield, MA. Yes, branch, as in real-world, brick-and-mortar, set-in-stone structure staffed by flesh-and-blood humans.

It’s got cash dispensers, high-quality TV screens, Sony PlayStations and a community room that can accommodate up to 30 people. And while this is the county’s largest bank, at least nine other Berkshire outlets have been similarly renovated recently.

Perhaps the most interesting addition has been teller pods, which essentially remove the time-honored barrier between customer and teller. In this arrangement, the teller stands in front of the computer, right alongside the customer during each transaction. If the teller is busy, there’s a place for the customer to sit while waiting. Cash dispensers situated by the pods enable tellers to stay accurate without actually counting the bills—another anachronism that can be happily disposed of. (It’s interesting to think about how bank robbers see this.)

The rationale behind all these changes, of course, is to personalize and enhance the interaction between corporation and consumer. People generally don’t go to the bank unless they really need to, and the inclination is always to conduct the transaction and depart as quickly as possible. For their part, most branches assume that the customer who can leave the fastest is the happiest.

However, when so many banking transactions are conducted online, it’s surely worth taking a look at alternative models.

In a sense, this approach flips conventional wisdom in other ways too—while consumers use banking apps to stay away from the branch, these banks are using different kinds of technology (teller pods, TVs, gaming consoles) to lure the customer inside the branch, and keep them there. The question is the extent of the value that can accrue from this relationship.

Not every branch has the space to even offer a community space, and customers who come in to, say, make a withdrawal have no real business staying there after they’re done. However, given the number of options now available to every consumer, anything that strengthens the relationship is a good thing.

A long time ago, IKEA created a differentiator by offering space for children to play while their parents shopped for furniture (it had been done before, but probably not to that extent). It’s even easy to surmise that kids clamored to go to the IKEA playpen, which in turn induced their parents to shop.

It’s hard to think of a direct equivalent for the banking industry, but it’s definitely interesting to see what innovative companies will try to lure new business and retain what they have. Might we see good banking combined with fine dining—a restaurant inside the branch, open only during banking hours? How about a sports bar where you get a drink and watch the game while paying your bills? Perhaps laundry services while you wait for a transaction to clear?

Comic speculation aside, innovation is always welcome. The banking industry’s reputation has taken a battering recently. Any approach designed to strengthen the brand and cultivate relationships is a very good thing.

Filed Under For Financial Institutions Tagged With banks, Berkshire Bank, brick & mortar branches, gamification

Small Business: Respect and Dedication

December 4, 2012 By Banking.com Staff 7 Comments

In a recent blog on Banking.com, we explored how small businesses don’t always get the respect they deserve from the banking world. There’s no question that this sector of the economy is always vital, and increasingly optimistic. In fact, the number of businesses that report being ‘better off’ jumped from 16 percent in 2009 to 33 percent in 2012. This is also a market rich with possibility: on average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers.

And yet, this market continues to rank near the bottom in banking satisfaction. So what’s going on—and what can the industry do to make thing better? The new J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, a comprehensive research report that identifies and highlights the situation described above, digs deeper into the problems and identifies many of the pain points.

As mentioned in the previous blog, credit is still the primary issue, but it’s not the only one. The J.D Power study lays out more fundamental problems too. In particular, while small businesses are sometimes lumped in with retail banking, there are major differences between the two.

First, small businesses expect greater competence and responsiveness from their bank, since their needs are more complex needs and they bring greater value. Second, relationships are everything: they want an account manager who understands their needs and provides customized solutions. In both these areas, the study shows, banks come up short.

In routine transactions conducted both face-to-face and on the phone, small business customers say their experience either mirrors that of retail customers or doesn’t even rise to that level. By the numbers, 21% of retail banking customers have problems in a given year; 36% of small business customers say the same. Similarly, only 43% of small business customers say their assigned account manager (if they actually have one) ‘completely’ understands their needs. The latter problem is particularly acute: the J.D. Power study outlines the ways in which a good relationship with an understanding account manager makes a significant difference in terms of discussing loan options, receiving regular updates, etc.

The problems extend past business issues to even more basic headaches. The data shows that small business customers are less likely to experience in-person best practices than retail customers when they visit a branch, are less likely to be greeted by name, and are more likely to experience longer wait times.

The study does take into account equivalent concerns on the banks’ side: It’s perhaps unrealistic to expect that every account manager will have a full understanding of every small business account they handle, and it is only natural to assign bank personnel to accounts where they offer the greatest value. However, there’s also no question that there is plenty of room for improvement here.

The study does lay out some remedies. First, while there can (and should) be some discussion around whether to have a dedicated commercial-only window in particular branches, there needs to be more training staff-wide on paying greater attention to small business customers. Second, in the era of Big Data, we have more information at our fingertips now than ever before on each account and the market in general. This should be used more effectively to develop a greater focus on this critical market segment. Finally, while many institutions fully intend to create small business specialists within call center groups—with experienced representatives and specialized training—the final product often falls short. If, as the J.D. Power study makes clear, “a dedicated small business team is established—and the data suggests it should be—it needs to be sourced and managed appropriately.”

Ultimately, of course, any list of best practices runs the risk of being too generic, the same problem that frequently afflicts this market. The small business market is undeniably both vast and fragmented. It’s also vital—and for the banking industry’s purposes, potentially very lucrative. It deserves respect, and that will come through customized solutions backed with knowledge and dedication.

* Now in its seventh year, the U.S. Small Business Banking Satisfaction Study measures small business customer satisfaction with the overall banking experience by examining eight factors: product offerings; account manager; facility; account information; problem resolution; credit services; fees; and account activities. The 2012 study includes responses from nearly 7,246 small business owners or financial decision-makers who use business banking services. The study was fielded from August 10, 2012, through September 10, 2012

For more information about the J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

Filed Under For Financial Institutions Tagged With banks, customer satisfaction, J.D. Power and Associates, small business banking, Small Business Banking Satisfaction Study

Small Business: Perception vs. Reality

November 21, 2012 By Banking.com Staff 1 Comment

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business. This is the future, we were told by every candidate—the very backbone of the nation’s economic infrastructure, the greatest source of employment and innovation, the foundation of America’ greatness.

The new J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study paints quite a different picture. It uncovers an environment where optimism co-exists with uncertainty, and where tapping capital resources remains an unnecessarily onerous task. Far from being lauded, this is a market that is looking for support, deserves it, but too often doesn’t get it.

There’s no question that as the economy continues to recover, however slowly, small businesses will play a critical role. Those already in the market are on track to keep growing, and this will turn help fuel the creation of others. Indeed, the study highlights a degree of optimism in this sector. There’s a clearly perceptible spike in the percentage of small business banking customers who report being better off now than they were a year ago. It’s still far from a majority at 33 percent, but that’s still a 10 percent jump over last year’s corresponding number, and even better news compared to the 15 percent who now say they’re worse off.

“There is a long road ahead to economic recovery, but it’s positive to see that small business banking customers report they are better off this year over 2011,” said Jim Miller, senior director of banking at J.D. Power and Associates. “Since 2009, we have seen the percentage of those who reported to be ‘better off’ jump from 16 percent in 2009 to 33 percent in 2012.”

For banks in particular, there’s even more good news. The JD Power study reports that, on average, small businesses hold deposits four times greater and loan balances 15 times greater than retail banking customers. The people running the businesses are doing well too: these customers carry higher levels of personal banking business than the average consumer.

And finally, there’s the profit factor. Perhaps contrary to conventional wisdom, profit margins associated with small business customers are typically higher than those associated with larger corporate banking customers.

However, the gulf between perception and reality extends into other areas as well, with less happy results. As the JD power study makes clear, this market doesn’t get the respect it clearly merits. For the record, there is a higher level of overall satisfaction in the most recent report, but that’s still cold comfort. In fact, it still ranks near the bottom among the financial services businesses that the study covers (only mortgage servicing ranks lower). Even the credit card business, which long languished at the bottom, has now moved past small business banking in satisfaction to levels enjoyed in the retail banking sector.

The elephant in the room, of course, is credit, or rather the lack of it. Oddly, the hard numbers don’t necessarily show a decline here: 82 percent of small business loan applicants say got approved for their most recent loan, the same as the year before. However, a recent research effort conducted by the Small Business Administration that went a level deeper revealed that lending this sector has been falling steadily since 2008, the year of the banking meltdown. This is likely one factor behind the declining Availability of credit rating, which is down from 6.71 (on a 10-point scale) last year to 6.65 in this year. That’s actually one of the lowest-rated attributes in the 2012 study.

Again, all the clichés ascribed to the small business sector—hardy, entrepreneurial, innovative—are real. This is a risky proposition, and we all know just how many new ventures don’t survive. At the same time, as every good candidate will point out in every stump speech, small business is exactly what will fuel overall economic recovery.

In the next piece, we’ll look more closely at the pain points in this market. But for now, the unmistakable takeaway is that small businesses are healthier than they’ve been for a while, they’re vital for economic growth, and there are significant profit margins involved. The market is good for companies, good for individuals, and good for the economy. Given those considerations, the banking satisfaction levels identified by the new report are lamentably low, and it should be the industry’s goal to do better.

For more information about the J.D. Power and Associates 2012 US Small Business Banking Satisfaction Study, please contact: Holly Zagresky at (248) 680-6319 or via email at Holly_Zagresky@jdpa.com

Filed Under For Financial Institutions, Surveys Tagged With banks, customer satisfaction, J.D. Power and Associates, small business, small business banking, Small Business Banking Satisfaction Study

Why There Isn’t a Bank Transfer Day in 2012

November 5, 2012 By Simon Zhen Leave a Comment

*This post originally appeared on MyBankTracker

From June 2011 to June 2012, credit unions reported a year-to-year increase of more than 2.16 million memberships — the largest influx of members in the past decade, according to data by the Credit Union National Association.

In the prior year, there was only a 552,890-membership increase at credit unions.

The four-fold jump in new memberships is easily attributed to last year’s Bank Transfer Day (held Nov. 5), the consumer movement that rallied fed-up bank customers to close their fee-riddled accounts and move their money to credit unions.

The exact number of consumers who made the switch because of Bank Transfer Day is difficult to determine, but the movement did push credit unions into the spotlight.

This year, however, there will be no official Bank Transfer Day to give banks a run for their customers and deposits, said Kristen Christian, the creator of Bank Transfer Day.

Christian, a former art-gallery owner, now spends most of her time attached to her notebook PC while she journeys throughout the country, and other parts of the world, as a speaker/consultant for credit unions.

For instance, earlier this month, Christian attended a credit-union conference in Pennsylvania and spoke on ways that credit unions can market to younger generations through social media.

“It’s been such an incredible opportunity to promote consumer empowerment and economic sustainability while helping cooperatives [financial institutions owned and operated by its members] reach the next generation of members,” Christian said.

But, her new role isn’t the main reason that there won’t be another Bank Transfer Day this year. Rather, given that 2012 is an election year, Christian does not want to distract consumers from exercising their right to vote.

“While we’ve seen significant media attention dedicated to the Presidential race, I’ve yet to see significant steam for Senate elections,” said Christian, who aims to draw support forSenate bill S. 2231. The bill is an amendment to the Federal Credit Union Act that would more than double the lending cap for credit unions from 12.25 percent of assets to 27.5 percent. Christian says this would enable credit unions to promote the growth of local small businesses through low-interest rate loans. “This piece of legislation has a potential to create 140,000 jobs at no cost, yet lacks the support in Senate many voters feel it deserves.”

Non-violence

Additionally, Christian does not want any violence to break out during the promotion of another Bank Transfer Day.

Last year, Bank Transfer Day happened to coincide with Occupy Wall Street, another non-affiliated consumer movement. OWS protesters organized a “March on the Banks” event that gathered bank customers to close their accounts, which occurred in a less-than-civil fashion at some banks. At one Citibank branch in New York City, protesters were locked in the branch — until police arrived — because they were holding a protest in the middle of the bank.

“Being a pacifist by nature, I was disgusted by the disruption caused last year in the name of Bank Transfer Day,” Christian added. She encourages consumers to close their bank accounts independently and respectfully. “These front line employees have absolutely no control over bank policies and certainly didn’t deserve the abuse heaped upon them.”

Occupy Wall Street has been unable to rebuild momentum this year and its impact has diminished significantly. If the movement fails to return in the future, would Christian promote Bank Transfer Day again? Probably not.

“As people constantly evolve, I think social movements should as well,” said Christian, who’ll commemorate Bank Transfer Day for many years to come. “In many ways, it’s a celebration of the principles that bore the American revolution: rallying together to inform one another and defend the communities we’ve worked so hard to build.”

This Nov. 5, Christian will be in Baton Rouge, La. to raise awareness for Senate bill S. 2331.

Consumers don’t need an official day to move their money from banks that are treating them unfairly. As Christian and credit unions would say, “Every day is Bank Transfer Day.”

To anyone or any organization that seeks to effect a similar consumer-advocacy campaign, Christian preaches: “The best advice I can give to anyone who seeks to implement significant change is to approach their efforts with patience, reason, love and a sense of humor. I’ve found love to be far more effective than hatred.”

How has your organization seen the effects of Bank Transfer Day in the last year? Let us know in the comments below!

Filed Under For Financial Institutions Tagged With Bank Transfer Day, banking, banks, credit unions, elections

We Need To Talk (About Security)

October 10, 2012 By Banking.com Staff 1 Comment

It’s easy to forget, but the most basic social media channel of all is. . .talking. And when it comes to banking, that’s come to represent a glaring security flaw.

Most financial services institutions are hyper-vigilant about building information security defenses into their online and mobile channels. It’s not just required by law, thanks to dozens of compliance mandates, it’s also good for business. More to the point, as documented on this site, many banks have launched education and marketing campaigns to spread the word about the security measures that they take, and what their customers should do to prevent theft, fraud and other forms of abuse.

However, that still leaves one key variable—call centers. It’s a curious dichotomy: many of us take those anonymous voices on the other end of the phone for granted (unless they can’t provide the answer we need), yet we freely give them all kinds of sensitive data, everything from addresses and social security numbers to account-specific information. Let’s face it, we have to give it to them to get the answers we need.

It’s almost reassuring to know that the calls are being recorded, since this helps improve customer service, and gives us a backup. It also means those calls are being stored and archived somewhere—and that presents a problem.

For the record, there are certainly regulations governing these practices. The PCI-DSS (for Payment Card Security Industry Data Security Standards) Council says such recordings fall under the scope of PCI compliance, but it’s clearly an area that has received less attention with regard to security.

There are several issues here that deserve scrutiny.

First, any kind of information exposed through voice communications offers a goldmine for social engineering scams. The range of tactics used varies widely, but they mostly involve manipulation for the purpose of gaining confidential information. In the past, these attacks were of a random and mass-market nature. Now, thanks to the wealth of personalized information available through social media channels, they’ve become far more targeted and sophisticated. Every nugget gleaned through hacked voice communications offers a major step forward for the bad guys.

More broadly, so much of call center work is outsourced that it’s sometimes difficult to ascertain where the voice on the other end of the call is physically located, and where the calls are being stored. (In some cases, the company that wins the contract in turn outsources the work to a call center located in a different country.)

While the practice gained popularity as a means of greater business efficiency, outsourcing has in the past few years become a volatile political issue. Legislation introduced in Congress would, among other mandates, require business to disclose to callers when their calls are transferred abroad, and potentially give them the option to be transferred to a U.S.-based representative. While U.S. employment is clearly the primary driving factor, security is frequently cited as a key issue.

More regulation may be inevitable, but as always, the industry itself is best qualified to implement the best security, not because it’s forced to but because it’s good for business.

Just as technology enables optimal communications, it also enables optimal security. For example, there is software that automatically halts recording when key words with sensitive information are used.

In some ways, call centers represent old-world banking, while the threats they face are quite new. What really matters, however, is that whatever the means of communication, it’s up to us to protect our customers, and that means protecting every kind of data we receive.

Filed Under For Financial Institutions Tagged With banks, call center, PCI compliance, security, social media

National (Banking) Security

October 5, 2012 By Banking.com Staff 1 Comment

Here’s a perfect snapshot of the world today: When Iranian President Mahmoud Ahmadinejad addresses the United Nations, banking IT executives should be paying close attention. While concerns over Iran’s nuclear ambitions pay out on the global stage, even becoming a major issue in the U.S. presidential election, it’s not only the Departments of State and Defense that are involved. There’s ongoing speculation over the details, but it’s become increasingly clear that in the past few months, several U.S. financial conglomerates—Bank of America, JP Morgan Chase and Citigroup, among others—have been under cyber-attack. There’s no official confirmation of the source, but it’s increasingly believed that the hackers were based in Iran.

The specific motives are still unclear, although it’s not hard to accept that economic sanctions that have been imposed are a major factor. For the record, the Iranian government has claimed in the recent past to be building a ‘cyber army,’ and has even called for loyal citizens to hack into Western institutions.

It’s not just banks getting caught in the crossfire. Just this week, Google warned Gmail customers that “state-sponsored attackers” may be trying to compromise their computers. Google didn’t name the state doing the sponsoring, and in this case Iran claims to be among the victims.

We still don’t know much about the recent attacks—just how broad they were, and the extent of the damage caused. For the most part they seem to have been Distributed Denial of Service (DDoS) attacks, which are typically made up of waves of phony traffic that effectively shut down otherwise functional servers and badly disrupt operations. There may not have been outright data theft, but many customers were unable to conduct online transactions, leaving banks with considerable remediation and repair costs.

Industry experts believe the attacks were heavily coordinated and targeted, pursuing weak spots that were likely uncovered through extensive research and surveillance. It’s being reported that thousands of servers were hijacked for the purpose.

The attacks seem to have subsided in the past week, but looking ahead, there’s continuing cause for worry.

First, by all accounts, these were not isolated incidents or the work of malicious kids out to prove their skills. Most DDoS attacks take considerable organization, skill and resources, and the new wave was no exception. These showed sophisticated tactics backed by patience and expertise. The diversity of their origins—the ‘botnets’ could be anywhere—makes the defense even more problematic.

It’s definitely uncomfortable to be considered alongside defense contractors as part of the ‘military-industrial complex’ and become the focus of geo-political tensions. However, the undeniable reality is that the information technology infrastructure underpinning the entire economy makes a choice target. Criminal gangs out for profit are no longer the only digital threats we need to keep in mind. Cyber terrorism is now a potent weapon in international conflicts, and few actions make a more potent political statement than bringing down the financial services industry.

There’s no reason for us to stop doing what we do—that would be handing the bad guys a true victory. However, it would serve us well to be vigilant. There are no guarantees here, but no one should be surprised if there are more attacks, whether through DDoS or new virus strains. Security must be a top priority: We need to help our security specialists build the best defenses possible, and ensure that even with waves of sophisticated assaults, operations are not disrupted.

Filed Under For Financial Institutions Tagged With banks, Gmail, Google, security

The Impact of the iPhone 5 on Bank Marketing

September 18, 2012 By Jim Marous Leave a Comment

*This blog was originally posted on Bank Marketing Strategy by Jim Marous. Jim is the senior vice president of corporate development for the direct and digital agency New Control focused on building strategic solutions for the financial services industry. You can follow him on Twitter @JimMarous or connect on LinkedIn.

So, the anticipation is over and the newest version of the iPhone has been introduced. When all was said and done, there were few surprises left as to what the iPhone 5 would offer, and for those of us who were crossing our fingers for the possibility of NFC integration (and further payments disruption), there may have even been a bit of disappointment.

And while additional enhancements to the Passbook app provides a glimpse into the potential for a head on competition with Google Wallet for payments supremacy in the future, the shop-with-your-phone coupon capability is not applicable to most bank marketers. What should be of more importance to bank marketers is the additional marketing real estate provided with the new phone and the growth in sales that may be on the horizon.

Bank marketers should see promise with the iPhone 5′s larger, 4-inch screen with Retina display which provides 18% more pixels for delivering enhanced mobile ads, banners, landing pages and interactive campaigns. While the extra pixels may not seem like much, it moves the iPhone experience closer to that of the iPad, which has already proven itself to be a major tool for consumer consumption. And for those who are still tablet-less, it is possible that this new device will a bridge for engaged behavior.

According to Rachel Pasqua, vice president of mobile at digital agency iCrossing, “the enlarged iPhone is enough to make mobile creative a little more eye catching and get more users more deeply engaged.” She mentioned that there will also be less potential for mis-clicks leading to better potential interaction. The potential for greater speed through the LTE and the new iOS6 also will help.

Charles Golvin from Forrester Research noted in a recent post that while other competitors already offer a larger canvas in some cases, “Apple still outpaces the competition when it comes to the entire package — the new iPhone unites significant improvements in industrial design, imaging, audio and connectivity, along with the wealth of new capabilities that iOS6 enables.”

The key for bank marketers is that iPhone 5 users, and smartphone users overall, will be spending more time with content on their phone. It is therefore important to provide the level of content that optimizes both the customer experience and marketing potential of the new devices. Consumers are no longer content with static web pages and difficult to use links and landing pages. Content (web pages, banners, ads, landing pages, etc.) will need to be easier to interact with and be more dynamic.

There is no way of knowing how popular the new iPhone 5 will be in the marketplace, but if the past is any indication of the future, not only will many current iPhone users upgrade to the new model, but the overall iPhone penetration will increase as well. As shown below, nearly 2 in 5 of the 38.2 million Americans using iPhones are on the iPhone 4, which was released just 2 years ago. More impressive than that is the fact that 35% of iPhone users today are on the iPhone 4S, which was introduced less than 12 months ago.

Just as with the tablet, bank marketers should realize that simply ‘super sizing’ a current app or website is no longer enough from the customer’s perspective. It is important to leverage the tools and advancements that are available with the newest generation of phones.

And even though our industry does not have products that are as visually appealing as in retail and other industries, the challenge to differentiate our offerings may be greater, but the opportunity is still significant.

Filed Under For Financial Institutions Tagged With Apple, banks, iPhone 5, NFC technology