Study: Financial Institutions Spend Little to Manage Privacy

Share this content:
Though financial institutions are spending large amounts of money to update their security and to enhance their customer databases, little is being spent to manage their customers' privacy, according to a study by Meridien Research.

Financial institutions worldwide will spend $25 million this year on privacy technology and likely will spend as much as $167 million by 2006, according to the study, "From Privacy to Practice: Privacy Management Solutions." Much of the spending will be misdirected toward database enhancements or modifications rather than toward privacy management, the study said.

Meridien also said that spending on privacy management will be inconsistent, with the 500 largest global financial institutions accounting for about 98 percent of the market. The institutions with a greater number of systems and processes will spend more to enhance the privacy of those systems and less on privacy-related customer service.

"Lack of a clear understanding about institutional privacy management issues will create a large amount of irrational or misdirected spending," said Dennis Behrman, a Meridien analyst and the author of the report. "Many institutions will spend a portion of their privacy budget on encryption technology, biometric authentication systems or single sign-on solutions. These initiatives do very little, if anything, to mitigate the risk and decrease the costs associated with privacy management and compliance."

Behrman said financial institutions should focus more on "privacy middleware," or software that manages and controls both privacy processes and policies, which will let them proactively manage their customers' privacy needs on a one-to-one level.

"Institutions must find a way to use technology to take managerial policy and codify it as a set of operational rules," he said. "The most effective way for technology to be used by an institution to manage a customer's privacy is through the use of rules-based engines to ensure the integrity of those business rules and to see to their enforcement."


Next Article in Data/Analytics

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above