Answer:
Most people working in the financial services industry probably agree that privacy does matter; however, it is not as clear that most decision makers in this industry today truly understand either the magnitude of this issue or the potential impact to the bottom line.
One player in the customer relationship management (CRM) space is Siebel Systems, which reportedly has approximately 24 percent market share in a very fragmented industry. Part of the reason CRM is so important to Tom Siebel, owner of Siebel Systems, is because one day a 32-year old bus boy attempted to transfer $10 million from a Merrill Lynch account belonging to Siebel. Before he was caught, he was successful in buying a number of items charged to the credit cards of many celebrities (Steven Spielberg, Oprah Winfrey, Warren Buffett among them) by getting enough information over the internet (social security number, account numbers, addresses, birth dates) to pose as his victims.
In Bloomberg Personal Finance magazine, September 2001, Jill Andresky Fraser notes that her researchers found that as little as $26 could buy you a social security number online in a matter of hours, which is often the key to unlocking as much information as you need about someone. While this can result in the kind of singular massive infraction that Tom Siebel experienced, it can also result in identity theft - a crime with numbers that are growing considerably. In fact, the Federal Trade Commission reported receiving 85,000 complaints last year and some consumer advocates suggest that as many as 750,000 identities are stolen each year. This was highlighted in the news recently with reports of how the federal authorities cracked a ring responsible for the largest case of identity theft in US history. An employee of a software company that helps banks and other businesses gain access to consumer credit reports was charged with stealing access codes and passwords for those companies and using them to get credit information for 30,000 people. That information was then used to drain victim's bank accounts, open credit card accounts, buy merchandise and establish lines of credit. Law enforcement officials say the losses so far total $ 2.7 million and they expect that figure to grow.
In identity theft, most people don't discover something's wrong for 12-15 months and from that point spend on average 175 hours and $1,000 of their own money resolving the problem.
Of course, the impact of the potential loss of privacy takes on a whole new meaning when we look at the issue from the perspective of our individual companies. Nearly 70 percent of US consumers are concerned about their privacy online and 92 percent of consumers are concerned about the misuse of their personal information online. Jupiter Media Metrix predicts that online sales would be approximately 25 percent higher by 2006 if consumers' fears about privacy and security were addressed. Importantly, a study by NFO Interactive, a developer of Internet-based research tools, found that trusting a Web site to keep their personal info private is the number one attribute that would persuade surfers to buy online.
In other words, the fear of a loss of privacy holds the potential to seriously impact the level of online commerce worldwide - and a company's responses to it hold the opportunity to distinguish itself in the minds of its customers.
There should be no doubt on this one issue: Protecting privacy is good for the bottom line, and not protecting it could be catastrophic.
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