Importance of Banking Relationships In The Age of Hacking

The banking industry is walking a narrow line between providing advanced digital solutions, while at the same time building a level personal relationship that doesn't expose an organization to increased cybersecurity threats.

Recent ransomware attacks demonstrate the global and indiscriminate reach cyber attackers have. So, it is not surprising to see renewed calls for banks to reduce their reliance on technology, and even take certain services offline. That’s the opposite of what your strategy should be.

Yes, there are security and compliance concerns to address, and the digitization of the industry chips away at the personal touch of relationship banking. However, a retreat to manual processes and systems will stunt your efforts to differentiate your products and services. Instead, it is best to leverage technologies that facilitate online one-on-one collaboration with a consumer, while maintaining the same level of security and privacy that a meeting in your office to review confidential documents provides.

In the HuffPost editorial “Mass Hacking: Time To Go Off-Line,” Robert Kuttner, editor of The American Prospect and professor at Brandeis University’s Heller School, makes several arguments for moving banking offline. One is that because vital systems appear unable to withstand the cyber attacks, the best solution is to disconnect them from the internet.

“Call me a Luddite, but I wonder if that would be so terrible. It might even be a blessing in disguise,” Kuttner adds.

I disagree with Kuttner on most of his points, except one: “Hackers will always be able to find ways of getting into networked systems,” he states. “The fantasy of ever better cyber-security is delusional.”

It is impossible for any security solutions vendor to guarantee you will be able to thwart 100% of the attacks waged by hackers to gain access to your systems. At the same time, consumers expectations of 24/7 access to services from any connected device are not diminishing. Just the opposite, in fact. Therefore, your focus needs to be on mitigating the risk of a data breach by protecting sensitive information, should an attacker get past your defenses.

The Importance of Relationship Banking

There is no more effective marketing asset than a satisfied customer or member. As you build loyalty and trust, the people who do their banking with you become your strongest brand advocates. Mobile banking, and the broader digitization of the industry, has made cultivating those relationships more challenging however.

There is an ever-growing number of fintech firms emerging that eschew personal interactions entirely, offering mobile apps and other faceless services that emphasize convenience over relationships. Yet, embracing an offline existence is not the formula for competing with these services.

The reality is that many of your customers and members – and especially the next generation of consumers who grew up in a high connectivity world – likely prefer using your web site and mobile apps to conduct simple transactions such as bill paying and remote deposit capture. But the more infrequent and complex transactions, such as applying for a mortgage, planning for retirement or opening an investment account, often brings a demand for more human interaction, not less.

These high-touch interactions present banks and credit unions with a two-fold challenge: reduce friction for users who want to conduct business on their computers and phones; and improve customer engagement by turning one-way interactions into engaging two-way interactions, regardless of the level of digitization.

The good news is that you have a significant advantage hidden in your ever-growing collection of consumer insight. The trick is finding and maximizing the information – the proverbial needle in the haystack – so that you can securely and efficiently interact with customers when the conversation goes online.

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Leveraging Data to Improve Engagement

For decades, financial services organizations have been implementing technology platforms to collect and analyze consumer information – i.e. databases, CRM systems, etc. Unfortunately, the result is a patchwork of siloed systems that often do not “talk” to each other to analyze information and share insights.

If you fall into this category, your first question is, “How do I break down those silos and mine that data to engage with customers and members on a one-on-one level on a mass scale?” One answer is to leverage machine learning, artificial intelligence (AI), and predictive analytics. These technologies analyze your data to help you anticipate when a specific customer or member may be ready to apply for a car loan, mortgage, change their approach to retirement planning, or start saving money for a child’s college education.

It sounds counter-intuitive, but these data analytics solutions make it possible to create a highly-personalized experience that provides your customers with the feeling that you are tailoring your interactions with them – as well as your products and services – to meet their individual wants and needs.

For example, a loan officer can quickly and easily identify consumers who are ready to begin the mortgage application process. That officer can be proactive in reaching out to each household, and working with them on researching options and even completing applications in real-time. The consumer, in turn, see the loan officer’s face on the screen, not a faceless brand. Humanizing a process that can sometimes involve hundreds of thousands of dollars adds incredible value to the experience and increase loyalty.

The key is to smooth the workflow and documentation processes to reduce friction, and accelerate everything. This requires the ability to draw relevant content from various systems, and deliver them securely to your client and any relevant business partners. It is crucial that the process be easy and intuitive, reducing the need for employee or customer user training.

Secure Communication and Collaboration

Now, to address the elephant in the vault. Yes, as people increasing rely on digital systems, the risk of a data breach rises. The fact is, it’s not a question of “if” you will suffer a breach, but “when” a breach will occur and how big the breach will be. The key to minimizing risk, and therefore exposure, is to leverage security technologies and best practices to make it harder for thieves to steal sensitive information such as bank account numbers, social security numbers and other personally identifiable information (PII).

First, educate employees on best practices for minimizing the “Insider Threat.” Do not underestimate the risk that an innocent but careless employee poses. The IBM X-Force Threat Intelligence Index reports there are more insider-born attacks (58%) than outsider attacks (42%) on financial services. Of those insider-born attacks, more than half (53%) consist of ‘inadvertent actors’ falling victim to phishing attacks, or internal attacks from another networked system. Ultimately, most insiders are not acting maliciously; they don’t realize they’re causing harm.

Second, accept that online communications are a necessity in relationship banking – they are another vehicle for getting closer to consumers. Do not revert to an offline world, but never underestimate the security threat online communications pose. For example, standard email, or consumer-oriented file sharing applications should be avoided for sensitive, and especially regulated data. Instead, identify secure file transfer or collaboration solutions (when 2-way communication is required) that provide many security and compliance capabilities.

Implementing technologies that analyze consumer data and ensure the security of communicating that data will enable you to walk the line between improving relationship banking and hardening your security posture, even in today’s digital age.

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