Today’s banking environment is more competitive than ever: Expanding geographic boundaries and the increasing number of branches leave community banks fighting with peers, credit unions, mega-banks and non-bank financials alike for market share. As a result, all banking organizations are improving Web-based service offerings to supplement branches and call centers.
Instant messaging, multi-party voice, video, secure data sharing and Web conferencing can offer benefits in terms of saving time and money, enhancing communication efficiency and member service, and strengthening employee recruiting and retention. The business value of collaborative Web-based communications is undeniable. According to a 2006 study by Wainhouse Research on converged communications, productivity and monetary benefits dramatically increase when Web and audio conferencing are used in combination with messaging (instant messaging, calendars, e-mail or mobile) and data sharing.
However, there are many potentially costly business and legal challenges to new communication media. To ensure a profitable venture, banks must prepare for future rules and regulations above and beyond basic e-mail practices. Senior managers will have to develop programs that address the security, storage and regulations that new technologies introduce.
Security and Archiving
All Web communication should be as secure as Web banking, but the task is not as simple as it sounds. Instant messaging alone is like monitoring e-mail in real time. Add to that the ability to monitor and control video conferencing, file sharing, blogs, message boards and mobile access through a wide range of communication devices, including phones, computers, ATMs, kiosks, and mobile devices such as BlackBerries and cell phones.
The wide reach of these tools – and the serious impact of a potential security breach – will most likely drive the security responsibility beyond IT to the senior management level. Financial institutions should have clear policies in place for what is allowed and how it should be documented. These new media will undoubtedly usher in a new wave of fraudulent practices – more advanced than phishing and other current predatory e-mail techniques.
As a basic rule of business, all communication interactions should be recorded and stored, creating an audit trail of all customer and internal communications to meet evolving compliance requirements and avoid any fines imposed by regulators for insufficient data security or breaches. If any lesson can be learned from the plethora of data breaches and lost customer information, it is that banks need to be very careful how their data is stored and archived.
E-mails, instant messaging, blogs and other Internet activities create written records that are the electronic equivalent of DNA evidence. One in five employers has had e-mail subpoenaed by courts and regulators and another 13 percent have battled workplace lawsuits triggered by employee e-mail, according to a Workplace E-Mail & IM Survey from the American Management Association and ePolicy Institute. This is sure to increase as the new media become more prevalent. Banks need to be sure that their records are stored systematically and efficiently, and are easily accessible.
The best way to address all of these security and storage issues is to seek the advice of legal, IT, records management and third-party compliance experts before investing in Web communications. Banks need to select Web communication tools with digital certificates and encryption routines to ensure that the integrity of their software meets the strict requirements necessary. Work with software vendors that have had independent auditors test and verify security standards of their software. Current comprehensive, independent reviews should test more than 100 control objectives from various different attack agents to ensure maximum security. These tests are meant to anticipate worst-case scenarios for fraud and security breaches, protecting the bank both internally and externally.
Financial institutions are cautious adaptors to new technologies and Web communication is no exception. Click-to-call buttons and Voiceover Internet Protocol are becoming commonplace throughout the retail industry, including L.L. Bean and telecom providers like Vonage. The benefit of this is that innovative banks can learn from these industries.
The National Association of Securities Dealers and the New York Stock Exchange have recently proposed a supervision of electronic communication for public companies. The proposal’s goal is to develop an effective supervisory system with clear policies and procedures for the general use and supervision of electronic communications, both internal and external, which are updated to address new technologies, such as Weblogs and podcasting.
Such regulations will soon find their way into the banking industry as well, and community banks need to be prepared for them or risk losing their investments. There is no room for shortcuts in this easily penetrable environment. Community banks must ensure any communication system their employees or customers use holds steadfast to the highest security standards. Anything else risks privacy leaks and possible regulatory fines. Additional education will be needed to support these efforts as well. Banks must provide employees with defined policies, a clear list of what is allowed to be accessed and training on a regular basis.
Internet communication is turning out to be better than the next generation of the telephone – its speed, accuracy and efficiency appeals to businesses and high net-worth customers, while its collaborative structure and various media make it advantageous for all members of society. Community banks already implementing these programs have experienced positive feedback in more ways than imagined. Not only are the younger generations adapting quickly, but even older customers who are less computer-savvy appreciate the ease of using a “click-to-call button” in reaching real time Web assistance and the hearing-impaired community appreciates textual interactions. Regardless of the use, there is a lot of potential for increased market share and return on investment with Web communications, but banks must proceed carefully and be sure to meet rigorous compliance and security standards to see any of the benefits.
Julie Nance is managing director of North American Operations for Greensboro, N.C.-based Medianet Innovations, a global provider of collaborative technologies that enable innovative human interactions to occur in the workplace, leading to improved corporate performance.