Thursday, December 27, 2007
2008 Budgets Beefed Up for Data Security Expenses
One item that is not getting short shrift in the community bankers' 2008 budgets is expenses for protecting consumer data. While controlling costs has consistently been a top priority for these financial institutions, many report being fearful of an unauthorized infiltration of their bank databases, and are investing security related technology. In an article in the December 21, 2007 American Banker, bankers report that criminals are constantly searching for a weakness in banks' firewalls, and that they must continually monitor such attempts to be certain they have addressed any vulnerabilities. These banks now appear to be keenly aware of the damage to their reputation that could result from a data security breach, particularly where it could be shown that they did not take sufficient preventive steps to stave off an attack. This reputation risk, combined with increased attention being paid to banks' risk management policies and procedures by banking regulators, has caused banks to increase their budgets on fraud detection technology for the coming year. Reports of banks who were unprepared when a hacker "intrusion" occurred, and the resulting financial resources required to address the aftermath, have been a "wakeup call" for many banks. It has been this writer's frustration over the past several years that risk of data security breach has not been taken seriously enough. In the end, however, it appears that it was the plight of these victims of security breaches that finally convinced financial institutions that being penny wise and pound foolish should not be their motto when it comes to securing customer data.