|List By Date|
|Health Care and Entitlements|
New Privacy Study Finds Nearly 70 Percent Of Banks And Savings Associations Will Not Share Customer Information
Credit Unions and Finance Companies are More Likely to
Share Customer Information With Nonaffiliated Third Parties
(ST. CLOUD, MINN., May 15, 2001) When the consumer privacy
deadline rolls around in July, credit unions will be twice as likely to share customer
information than banks and savings associations, according to Bankers Systems recent
study of the sharing practices of over 3,900 financial institutions.
The study, which included banks, savings associations, credit unions, and finance
companies who worked with Bankers Systems on their privacy disclosures, found that the
majority of banks and thrift institutions (68.8 percent) indicated they would not be
sharing customer information with affiliates or nonaffiliates. Over 90 percent of those
that are sharing customer information indicated they will do so within the exceptions, and
will not be providing opt-out notices.
Thirty-four percent of credit unions in the analysis said they will not be sharing
customer information with affiliates or nonaffiliates. Nearly half of those that are
sharing customer information indicated they will be sharing within the exceptions, and
will not be providing opt-out notices. Credit unions that will share the information said
they do so in the best interest of their members because it will result in opportunities
for additional services of value for them.
Finance companies also showed a greater propensity to share. More than half (51.9
percent) indicated they will disclose that they share, or reserve the right to share,
their customers information with nonaffiliated third parties. However, they all
indicated they share information within the exceptions, and will not be providing opt-out
Asset Size and Location Play a Role
Asset size appears to play a role in the decision of whether or not to share customer
information. Bankers Systems analysis shows that the largest institutions are far
more likely to engage in third-party information sharing than smaller institutions. For
example, 63.5 percent of banks and savings institutions with over $1 billion in assets
plan to disclose that they share, or plan to share, customer information. Conversely, only
30 percent of banks and savings institutions with under $1 billion in assets plan to
disclose that they will share the customer information.
State by state comparisons also yielded some distinguishing data. In Colorado, Vermont,
Mississippi, Montana, North Dakota, Oklahoma, and Illinois, nonsharing institutions
outnumber their sharing counterparts by a margin of more than three to one. In contrast,
two states were found to have an overwhelming majority of sharing institutions. In
Michigan, 71.7 percent of the institutions studied plan to share customer data, and in
Utah, 69 percent intend to do so.
Bankers Systems study also found that nonsharing institutions are more likely to
provide their notices well in advance of the compliance deadline. This can be attributed,
in part, to the fact that their compliance requirements allow for shorter, simpler
notices, which can be finished more quickly. Institutions with more complex notices that
include opt-out language are less likely to have their notices completed and mailed early.
In addition to the study on sharing practices, Bankers Systems has been conducting a
survey through its privacy portalPrivacyHeadquarters.comto determine just how
prepared institutions are to meet the privacy disclosure deadline in July. With over 500
financial institutions responding so far, the results are as follows:
9 percent of the institutions have already sent out their privacy notices,
28 percent have their privacy policies drafted and printed,
52 percent are in the process of developing their privacy policies and notices,
11 percent have just begun to study the requirements.
According to Bankers Systems attorney Katie Iverson, these numbers are not
surprising. "Banks, credit unions, and thrift institutions are used to this type of
major regulation. For them, its a normal part of doing business. As a result, they
began preparing early, and for the most part are in good shape to meet the financial
privacy deadlines in the Gramm-Leach-Bliley (GLB) Act," said Iverson.
"On the other hand, some organizations that will be impacted by GLB, such as
automobile dealers and insurance companies, are more retail-oriented and are not
accustomed to this type of regulation," said Iverson. "They may not understand
the magnitude of the research, analysis, and decision making that is required in order to
accurately develop and disclose their privacy policies. Many of these organizations are
not far along in this process, and many of them will be scrambling before July."
Bankers Systems is the leading national provider of compliance resources solutions,
including documents, disclosures, software, training and services. The company offers a
full range of products and services to help financial institutions deal with the privacy
provisions of the Gramm-Leach-Bliley Act. Bankers Systems privacy products include
tailored disclosures in various mediums (paper, electronic, or web); training tools;
PrivacyStateWise internet tool for managing state-specific financial privacy issues in the
banking, insurance, and mortgage industries; and PrivacyHeadquarters.com, the heavily
visited portal dedicated solely to providing comprehensive privacy information for
banking, insurance, securities, and mortgage professionals at no charge.
About Bankers Systems
Bankers Systems, Inc., a CCH INCORPORATED company, is a leading national provider of
compliance resource solutions for financial institutions and their legal counsel. The
companys deposit, lending, and retirement plan documents, disclosures, software,
training, and support services are used by more than 12,000 financial institutions,
including 83 percent of banks in the U.S. In addition, over 60 leading core processors and
systems integrators use Bankers Systems compliance-related documents and other
components in their solutions. For more information, call 800-552-9410 or visit www.bankerssystems.com.
Bankers Systems Inc. is a registered trademark of Bankers Systems, Inc.
-- ### --