Is Internet Banking Private?
Part One

By Gail Rickards

This is the first of a two-part article on privacy issues related to online banking. Every person has her own definition of what constitutes an invasion of privacy, and we all want to determine what and with whom personal information is shared. The handling of private information in the internet space is particularly complex and increasingly controversial.

The place to start talking about information sharing is with a background discussion about…information.

In Control In Cyberspace?
On the Internet, information about us–what Web sites we go to and how often, what topics, products, and services interest us, what we put in our shopping carts (and if we buy or abandon the cart’s contents), and where we go next–is tracked. This is called “click-stream data” and, yes, it is collected and analyzed.

Personally, I’ve never been asked for my permission before this kind of information is gathered; in fact, I didn’t even know it was happening when I first started using the Internet. So much for thinking I had control over what personal information strangers have about me!

The Cookie Factor
Information gathering on the Internet doesn’t stop with click-stream data. Every site you go to plants a small data file called a “cookie” on your computer’s hard drive and brings data back to the site. Cookies can be very useful since they make reconnecting with the site faster and contain other information that makes using the site easier.

Cookies accumulate in a folder called a “cache,” and unless you go looking for them in your computer, you won’t know they’re there. If you look at the cache, however, you’ll find an identifying number, date, and time on each cookie document. Click on a cookie, and you’ll be connected to the spot on the Internet it represents. Remember, the space has your information, too, and can find you just as easily.

What Happens to All This Information?
This is the heart of the privacy concern. Information is collected for a variety of reasons: It’s a part of a good security program; it measures the traffic (or visits) to a site; it shows what visitors want and don’t want; it tells marketers which services to offer and to which group of people; and it reveals a site’s navigational glitches. This data mining obviously benefits internet companies, but there is also a benefit to users whose tastes and preferences may guide the site’s navigation and product selection.

Benefits aside, there is real risk associated with this information; namely, that it can be shared with or sold to others. And if it is collected without our consent, it can certainly be passed on in the same way. And once passed on, who can say what the next recipient will do with it?

Does I-Banking Collect Information?
As soon as you enter your I-banking site via the login screen, you enter a secure, protected site. However, a cookie is placed on your computer, and every click you make and transaction you conduct while you’re in the site is tracked by the bank.

What Do Online Banks Do With the Data?
In traditional banking, procedures are set up to track the progress of your transactions in order to ensure that your deposit, check, or payment is accurately processed. Bankers call this creating an “audit trail,” and it’s critical for accounting, safety, and improving operations. In I-banking, tracking your clicks creates an essential audit trail in a digital format.

Marketing products and services is part of growing a banking business, so both traditional and I-banks analyze information about what customers like, dislike, and demonstrate a need for.

I-banks also partner or affiliate with other financial service companies to provide added services–insurance or stock brokerage, for example. Online banking sites can be full of “click here” messages, some linking to outside financial partners, some to the bank’s own services. Relevant information is usually shared with partners and affiliates to make the process run smoothly.

Where Does Your Privacy Fit Into All This?
In the second part of this article, we’ll talk about recent privacy legislation, third-party watchdogs, and steps you can take to protect your privacy–from cookie control to masking your identity. In the meantime, be sure to read the Privacy Policy that typically appears on the home page of your online banking site. It’s often at the bottom of the screen, next to the security policy.

Click here to read part two of Is Internet Banking Private?

Do you have questions, comments, or topic requests?
E-mail me at: gail@rickardsconsulting.com