It's becoming a shared nightmare for financial services companies. During the course of the company's normal business, a computer tape of customer information is misplaced. This has never been a good situation, but new legislation and the attention of consumer advocates has made this a disastrous situation for companies in this space.
Take the recent ABN AMRO situation. The company is working along normally. It sends out a data tape bound for a credit repository. The tape enters DHL and then falls into a black hole. The company enters crisis mode, sending out word on Dec. 16 that the information is missing and offering 90-day credit monitoring to every client with data on the tape.
Two days later, the tape resurfaces again inside DHL with no signs of foul play.
But the damage is already done. People are less likely to remember the positive outcome than they are to remember the words "lost data." Realizing this, the company has extended its credit monitoring offer for up to a year for all affected clients.
It's not like ABN is the only company to suffer this fate in 2005. Far from it. Bank of America, CardSystems and even the FDIC all had data security problems this year. The worst part is that a breach of security is a costly problem for companies even when none of the sensitive data is actually stolen. Lose one record or one million records and you will suffer. It's enough to keep executives awake at night.
Expect to see more robust data security offerings in 2006 designed to solve this problem. We'll highlight them for you when we see them.