CSEC620 Individual Assignment 4

CSEC620 Individual Assignment 4  Disclaimer/Caveat/Disclosure/Whateveryouwouldliketocallthis: You are more than welcome to use my paper below as a reference. But, please be smart and do not simply copy and paste because your Prof. or TA will know. Just like you, they have access to this website as well. So be nice and smart and don't set yourself up for a failure, at the very least you should rephrase/paraphrase/reword/Whateveryouprefertocallthis. Just a suggestion, but at the end of the day, it will be your decision. :) Also, I have got at the very least 90% in each of my papers, but that DOES NOT guarantee that you will get the same. It depends almost exclusively on how your professor looks at your response and how s/he grades. The ones that I got were awesome professors and my work and my points went across to them, hence the higher grade. So, basically what I am trying to say here is that if you score less than 90% while using my papers as reference or as a whole, don't curse me out, you just got a stricter professor. :)  Abstract: The paper talks about the financial institutions of the United States (US) and their business practices. The paper talks about the privacy policies of these financial institutions and how these policies affect their customers. The paper also talks about the possible changes that the financial institutions can bring to their privacy policies so that they can better serve and protect its customer's information. Paper talks about the past incidents where the bank lenient privacy policies may be have compromised its customer's information and some of the bank employees were able to gain personal profit using private customer information.  Introduction: With the passage of time, banks and financial institutions have learned and enhanced their policies to better serve their customers, and at the same time expand their business in the ever competing market of banking. In the early ages of the banking industry, the bankers would operate locally and every town would have a small locally owned and operated bank on the street that would have accounts of the locals only. In the modern world, a bank, or a financial institution, native to Maryland state will have branches in Delaware, and a Delaware native bank will have branches in New York. Not only that, each one of the bank's system is linked to every other bank around the state and around the world. Which helps them to reach a wider audience than ever before, both physically, in the form of branches, as well as electronically through online banking. There are numerous banks and financial institutions currently operating in the United States (US) that offer online and offline (Physical Branches) banking options. Some are native to US, like Bank of America, Chase and Wachovia, while others are foreign owned but operated in US, such as HSBC. Each bank has its own mission and goal, and procedures and policies to serve its customers. There are number of banks currently operating within the US some on the local level, some on national level. Bank of America, Chase Manhattan Bank and Wachovia/Wells Fargo are some of the top tiered banks that have a visible presence in the country, as well as outside the US. Bank of America (BoA): Bank of America's (BoA) is one of the oldest US based bank was founded as Bank of Italy in 1904 by Amadeo Peter Giannini and his son in San Francisco, California. (Realestatezing, 2009). In the late 1920s, it became Bank of America and is serving its customers since then. Currently it operates in almost every part of the US and overseas. With almost 5900 branches, down from 6100 in 2009, BoA is the second largest bank in the US. (Augstums, 2009). BoA mission is to provide investment options to individuals and corporations. Their mission states: "Through philanthropic investments addressing community development, education and workforce development and critical needs, we focus on advancing economic opportunity in the communities we serve. By directing funds to the people who best know the community issues and needs in their local communities, we engage local community stakeholders and address pressing community needs for long-term positive change." (BoA, 2012) Like every financial organization, BoA has policies that it follows to serve its customers. According to its website, BoA has privacy policies set in place, through which it shares its customer's interests with its affiliations for marketing purposes as well as for its business expansion. BoA reserves the right to share its customers Personally Identifiable Information (PII), such as their names, Social Security Numbers (SSN), credit scores, account balances, transaction history and customer's investments. BoA shares this information with its subsidiaries, such as Merill Lynch, and financial partners, such as Banc of America, and non-affiliated companies, such as insurance companies and mortgage brokers, such as Country Wide. Chase Manhattan Bank: Chase Manhattan Bank, a subsidiary of J.P. Morgan Chase & Co., is one of the oldest bank of the US that was founded in 1799. (JPMorgan, 2012). Currently JP Morgan Chase & Co. consists of more than 1200 institutions, including J.P. Morgan, Chase Manhattan, Chemical, Manufacturers Hanover (in New York City) and Bank One, First Chicago, and National Bank of Detroit (in the Midwest). With over 5500 branches, Chase bank is the third largest bank of the US. Along with financial services, Chase is one of major issuer of the credit cards in the US, offering variety of cards with many different types of benefit program, such as cash back and point rewards. Similar to BoA, Chase bank also serves to individuals, and to the businesses as well, with their financial needs, including, but not limited to, investments options, checking options and lending options. The mission of Chase Bank is "to be field, and client driven, consistently delivering the best products and services to its customers in a cost-effective way." And at the same time create brands that will show their quality and integrity to the community. (JPMorganchase, 2012). Like BoA, Chase bank too have set policies and procedures that helps it to do business and serve its customers, while at the same time expand in the every changing market. Chase bank reserves the right to share its customer's PII, credit ratings/score, investment options and banking habits with its affiliates, non-affiliates and market partners to promote its business. Wachovia: Wachovia Bank, initially known as First National Bank (FNB), was formed in North Carolina (NC) in 1866 by Israel Lash. After his death in the 1870s, FNB was closed in its native city of Salem and was re-launched in Winston, in June 1879 by Israel Lash's nephew William Lemly. He also renamed FNB as Wachovia. (Martin, 2012). Wachovia, the fourth major bank of the US, merged with Wells Fargo in 2008 because of its financial struggles. The merger made Wachovia the largest bank in the US, leaving both BoA and JPMorgan Chase behind. Currently, with a little over 6400 branches, Wachovia/Wells Fargo is the largest bank of US. Like BoA and JPMorgan Chase, Wachovia serves to a wide audiences. Wachovia customers include individuals as well as businesses with financial and investment needs. Wachovia's is committed to " maintaining the highest standards of integrity and professionalism in our relationship with you, our client. We endeavor to know and understand your financial situation and provide you with only the highest quality information, services, and products to help you reach your goals." (Gardenswfa, 2012). Wachovia, like BoA and Chase, has set policies that helps it to provide services to its customers and expand in the market at the same time. Wachovia, like the other banks, reserves the right to share its customer's personal information, such as their names, address, SSN, account transaction history, financial and investment needs with its affiliates, non-affiliates as well as with its market partners to enhance and expand its footprint in the market. Privacy Policies of the Banks: The privacy policies of all of the banks operating in the US are almost exactly the same. All of the banks have a right to share certain information about their customers to their business partners. The table below shows the typical policies that each of the bank follows, including BoA, Chase and Wachovia: (Chase, 2012) Policies to Better Serve Customers: Most of the people are very cautious about how their personal information is being handled by the companies and organizations. When it comes to finance, people get even more cautious. As shown in the table above, the bank's practice of sharing customer's information between its affiliates and non-affiliates make lots of people uncomfortable. Not only because doing so spreads their information to the wider audience, but because their information will be going through more hands and systems during the process. Hence, increasing the chances of identity theft. Almost all of the banks and financial institutions in US limits the number of their employees that can access customer's personal information, customer don't see it that way. Banks and financial institutions have strict rules of who can and who can't access/handle customer information, customer usually think otherwise, and they won't be wrong either. There have been number of incidents where the bank employees did access the customer's information and committed identity theft. Jamal Gerard Mose-Burrel, 22, from Houston Texas was arrested and charged for stealing identities of multiple customers of the bank that he used to work and withdrew close to 86,000 dollars in the duration of two months. (Perera, 2012). Another incident involved a 40 year old Sherri Whitlock Hines from Atlanta Georgia, who stole over 60,000 dollars from multiple customer accounts at Community & Southern Bank. (Trubey, 2011). By looking at the privacy policies above, one might notice that a customer do not have full control on how to keep his/her PII private from the other organizations. Though, Federal law does give the customer right to protect some of his/her private information, but the bank still reserves the right to use that information for its own benefit, such as sharing it with its business partners, unless a customer choose to opt out of sharing. The best way banks can increase their customer satisfaction is by letting them opt out of all of the options in their privacy policy. The only section where the customer will not be able to opt out should be the first policy where the bank should be able to access personal information to process transaction, maintain the account, respond to court orders and legal investigation. Another option for the banks to increase their customer satisfaction is by opting out the customer from optional service by default. In most of the banks, including BoA, Chase and Wachovia, a customer has to opt out manually from sharing their information with the bank's affiliates and non-affiliates. And if a customer overlooks that part, where s/he can opt out, the information is then forwarded to the other partners. Though, none of these banks share or sell their customer's information to third party solicitors, all of these banks have numerous subsidiaries that, sometimes, are enough to keep a customer busy for a whole day just be attending their courtesy or sale calls. Also, none of these banks clarify what type of customer's transactions information they share with their affiliates for their business purposes. Knowing that information may also gain customer trust because some of the customers don't like to share the nature of their bank transactions with anyone. Along with that, keeping the information sharing, even among the affiliates and non-affiliates, to the minimum will also result in lesser chance of any foul play by the bank employees. The less hands, or systems, the personal information of a customer will have to go through, the less chances of that information to be used for illegal activities. Recently, customer's of Ally Financials was under scrutiny when its customers found out that Ally Financial wanted to know their current location when they tried to locate an Ally Financial ATM location. That feature was not mentioned in the privacy policy of Ally Financials nor was it mentioned anywhere else. (Kavoussi, 2011). Though not a major privacy violation, this feature did worry some of Ally's customers and may have made them rethink their choice.  Conclusion: Banks and financial institutions make policies so that they can increase and improve their business and market share, while avoiding any privacy or liability issues. Most of the policies created by the banks are meant to maximize profit while minimizing privacy issues and keeping their customer's trust in them. According to the banks current privacy policy, they are free to share their customer's personal information, such as name, address and SSN, with their affiliates and partners to improve their business. By looking at the current privacy policies implemented by the banks, it is clear that it designed to serve that purpose. Making any change to this policy might tip the balance. Making the policy any lenient for customer might restrict the banks to increase their business, while making the policy any stricter will make it impossible for the customers to trust their bank, or financial institute, anymore. Currently, the banks allow the customer to opt out of some features, but not all. If they change that, and let the customer opt out from everything, they will not be able to monitor the customer's needs and requirements and might lose a chance to benefit from that. On the other hand, if the banks take the opting out option off the list altogether, their customer wont trust them with their personal information and money, losing the bank its customer.  References: Augstums, I. M. (2009). Bank of America clarifies report of branch closings. Retrieved from, http://www.usatoday.com/money/industries/banking/2009-07-28-bank-of-america- branch-closings_N.htm BoA (2012). Retrieved from, http://www.bankofamerica.com/foundation/index.cfm?template=fd_localgrantmaking Chase (2012). Privacy Policy. Retrieved from, https://www.chase.com/index.jsp?pg_name=ccpmapp/privacy_security/protection/page/p rivacy-notice Gardenswfa (2012). Retrieved from, http://www.gardenswfa.com/section1.cfm JPMorgan (2012). Retrieved from, http://www.jpmorganchase.com/corporate/About- JPMC/jpmorgan-history.htm JPMorganChase (2012). Retrieved from, http://www.jpmorganchase.com/corporate/About- JPMC/document/business_principles.pdf Kavoussi, B. (December, 2011). Ally Financial's Location Tracking: Banks Move To Profit From Personal Information. Retrieved from, http://www.huffingtonpost.com/2011/12/01/ally-bank-location-tracking_n_1123699.html Marin, J. (2012). The Wachovia Corporation. Retrieved from, http://www.northcarolinahistory.org/encyclopedia/576/entry Parera, J. (January, 2012). Ex-Bank Employee Arrested for Bank Fraud, ID Theft. Retrieved from, http://www.myfoxhouston.com/dpp/news/local/120117-ex-bank-employee- arrested-for-bank-fraud-id-theft Realestatezing (2009). Retrieved from, http://www.realestatezing.com/banks-in-usa/bank-of- america/history-bofa.html Trubey, S. J. (October, 2011). Former bank employee accused of theft, identity fraud. Retrieved from, http://www.ajc.com/business/former-bank-employee-accused-1198918.html 12