Information Technology Risk Management

Perfect Storm or Perfect Opportunity?

Since the previous weekend, the discussions over the barbecues and around the water-coolers have ranged from "How come we didn't see it coming?" to "Who's next?" and "How big is the FDIC's chest to take on these hits?" I don't know the answers to most of these ... all right, let me be honest - I don't know the answers to ANY of these questions.

All the friends and relatives I spoke with during these past several days have bombarded me with a million questions on this and other related topics. Just because I have spent part of my career dealing with information technology risk management-related topics at financial services organizations, I must have some answers to these questions, right? After all, I spend more time talking to the senior officers and board members at banking organizations than the folks who were asking me these questions.

My Mom said to me: 'Weren't the officers of IndyMac assuring their customers that there is nothing to worry about. How can I trust my banker after this?' 

It has been over a week since the IndyMac story surfaced (see: Beyond IndyMac: It's a Crisis of Confidence), and I still don't have many answers. I feel like I committed a sin earlier today when I pointed my mom to the FDIC's website for more information on this topic. I should have had some answers for her, but I didn't.

More important is that someone from the bank she has been with for years should have had some answers for her. Perhaps they did! But like thousands of other customers, my mom didn't reach to the banker she has seen in the branch for years. She reached out to me and asked me if I think the bank we used to walk to will be next to follow IndyMac. The reason she told me why she didn't reach out to our neighborhood banker - in her words "Don't know if I can trust them." Even though she acknowledged our neighborhood community bank of the last 100+ years hasn't done anything wrong. Her justification was - "Weren't the officers of IndyMac assuring their customers that there is nothing to worry about. How can I trust my banker after this?

In light of this discussion, she also brought up Senator Chuck Schumer's letter to the Office of Thrift Supervision, citing concerns about IndyMac's long-term viability. I know that she was trying to get my opinions about whether this letter prompted 'run-on-the-bank.' I don't have any answers for her on this topic either. I just don't know enough! However, it did get me thinking on a number of other related topics - consumers and businesses alike consider the concept of trust, confidence, security and privacy synonymous with the term banking. If that confidence wanes in an institution, irrespective of the cause - be it facts or rumors -- isn't it a reason in itself for an organization to be driven toward a 'run-on-the-bank' type situation? From all the talk on the street and coverage from the press, there could possibly be some other instances in the works that could potentially erode this confidence even further.

I can't stop thinking but wonder: Is this how we define a perfect storm or an un-paralleled opportunity for bankers to foster confidence and trust from consumers on their ability to protect our most valued assets - not just the money, but even the information they are entrusted with?

In the meantime, consumers like my mom will seek to gather information from all sources possible - the neighborhood newspapers to blogs - to find ways to continue to have the same level of trust and confidence they had in their own neighborhood bankers before the IndyMac story surfaced a week ago.

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