Data Breach Protection
Electronic data breaches have become an increasingly common occurrence these days, causing fears among consumers and leading many to look for the appropriate precautionary measures. Doug Myers, Chicago Private Client Market Leader with Associated Bank, reveals the ways financial institutions and individuals alike can help protect themselves.
“Well it’s a huge issue,” Myers said. “And banks obviously have a fiduciary responsibility to their clients to protect their data, as do other asset managers and other companies ... and it’s been a huge issue, because we have found that anybody can go in and sit in a parking lot and collect data from a department store.”
Banks Are Working Hard to Shore up Defenses with Technology …
Keeping up with security needs has become increasingly difficult, as potential holes are poked in the system with seemingly increasing regularity.
“It’s a very scary issue, and I know banks are spending millions and millions of dollars on technology to enhance the security – as are department stores and other financial institutions. And we seem to put protections in place, and then all of a sudden, there’s another hack like an Equifax … and the Equifax issue was a big one and it hit personally to many, many millions of people, because of the fact it was such personal data, not just credit card information, but credit information generally and that’s a scary thought.”
Associated Bank and many other banks are putting significant funding toward technology enhancements and security measures, Myers notes.
“And as banking continues to migrate to the apps and to the mobile world, technology becomes – and technology security becomes – even more important to the consumer,” Myers said.
… And With Increased Human Involvement
One way to help prevent this type of fraudulent activity is to ensure human involvement in the equation.
“(It’s) absolutely (necessary),” Myers said. “And I’ll give you an example. When we do wire transfers – there’s been a lot of fraudulent activity in wire transfers (regarding) people buying houses and wiring monies to title companies and wiring monies to overseas and domestically – (we need) to authenticate (those) financial transactions.”
The way they’re authenticating those transactions is old-fashioned knowledge of their client base.
“And it’s been a big challenge for us, and we spend a lot of time talking about the security and how to authenticate clients,” Myers said. “And (for us), you cannot initiate a wire, for example, without talking to the client – if you know him and know his voice, his or her voice. If you don’t, they have to come into the branch, they have to sign certain documents, they have to make sure that we know who they are and what they’re doing with their wire transfers and it’s just become a bigger and bigger issue and every day we wrestle with this.”
The attempts at wire fraud occur regularly, Myers notes.
“We get fraudulent emails several times a week, asking to initiate a wire transfer when in fact it’s not our client it’s someone who has hacked into their … email account and sent us an email to authenticate a wire,” he said.
According to Myers, financial institutions like Associated Bank work hard to understand you and your banking habits, to spot when something seems awry.
“There’s a concept in banking called Know Your Client, KYC, and that’s very important because if Steve is a client of mine and he’s wiring to a foreign country that is out of his scope of things he normally does, we’re going to call you and question you on what are you doing,” Myers said. “And sometimes it’s legitimate and sometimes it’s not. But it goes back to having that relationship with the client, talking to the client, knowing what he’s doing.”
Be Wary of Email Phishing Scams
As you’re working to protect yourself from financial fraud, one tried-and-true method is to be on alert when it comes to your email inbox.
“We go through a lot of training classes as a bank,” Myers said. “We’re continually challenged to make sure we monitor our emails to make sure we know where that email is coming (from), (and) if we don’t know the sender of the email, for example, we might not want to click on an attachment. Because what we have found is the hackers typically get into a company or a corporation by the employees’ emails – by planting a link, and then if you click on it, that gets them entrance into our corporate system.”
Myers and his colleagues at Associated Bank exercise caution when it comes to trusting the source of an email – and they caution others to show that same level of prudence.
“And so as employees, we’re constantly trained and warned about being careful with your email account,” Myers said.
Your Cloud May Not Be As Great As You Think
One form of technology that’s emerged in recent years is cloud-based storage systems. These are great for freeing up space on devices, but they also present challenges when it comes to protection.
“The cloud situation is changing as we speak, and more and more firms are going to cloud computing,” Myers said. “I think as data becomes more and more prevalent, banks are going to do the same and go to the cloud for software applications and things like (that).”
The cost to protect that data is high.
“Once again, it’s spending a lot of money on technology to keep it updated, to keep it secure,” Myers said. “And it’s constantly changing, and it seems like every time we turn around the hackers get smarter than we are, and we then have to implement certain things and changes. And the cloud is a perfect example of: how do you protect that infrastructure as we know it … to prevent people from going in and capturing data.”
Artificial Intelligence Not a Match for Human Intelligence – At Least Not Yet
And in the realm of wealth management, Myers continues to argue there’s no match for working with a real person on your financial goals.
“When you sit down with a financial advisor, the advisor is going to know what your goals are, what your philosophy is on investing, for example, what your risk tolerance is,” Myers said. “And a robot who’s giving artificial intelligence and throwing out different product parameters or recommendations are not going to know the human side of it and, once again, especially in wealth management, it’s all about the relationship, how we know you, what’s going on in your life and following a financial plan … to make sure we’re on track to your personal and professional goals.”
While highly publicized robo-advisors might work in some limited capacities, the bigger picture remains; they’re no replacement for a face-to-face relationship, according to Myers.
“Well, you’ve taken the human equation out of it and, once again, for certain products or some of the retail investing, the robo-technology works, but when you get into wealth management, a true wealth management relationship, you can’t take the human interaction out of it,” Myers said.