Magazine article American Banker

Customer Privacy Issues Call for Balancing Act

Magazine article American Banker

Customer Privacy Issues Call for Balancing Act

Article excerpt

Ask a banker what his or her bank's assets are and he or she will usually point to the balance sheet and say something like, "Oh ... nearly $12 billion."

But the only assets of a bank that really matter don't show up in accounting statements. They are the people who work at the bank and the customers they serve.

Market surveys have shown consistently that banks are among the most trusted of the major institutions in this country. People might not like banks and the fees they charge, but they trust them.

They trust banks to pay them their money when it is due. And they trust banks to protect their privacy. If banks do anything to erode this trust factor, they will greatly diminish the value of their franchise.

That's why recent charges that banks are selling customer information and lists to telemarketing firms and others are so disturbing. We don't know yet what the facts are, as all we've heard are the allegations.

If the allegations are substantially correct and the practices widespread, banks need to adopt and implement new customer privacy policies without delay. I was heartened when I learned that the American Bankers Association and other trade groups will soon convene in Washington to address customer privacy. They need to act promptly and decisively-not to preempt congressional legislation on the subject, but to protect the reputation and integrity of the world's best banking system.

Speaking of Congress, now would be a good time for our elected representatives to exercise restraint and avoid grandstanding. The privacy issues are very complex and not well understood. A rush to judgment by Congress could do a lot of harm.

There are many times when banks must communicate customer information to third parties in order for the financial system to operate. Most banks have their customer checks printed by outside vendors. …

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