Major U.S. banks outsource account processing to India, creating security risks. Identity-theft expert Robert Siciliano explains why overseas operations have weaker protections and why banks keep doing it anyway until breaches get expensive enough to stop.
Chapters
Well, if you've called IT at work recently, you're probably connected to someone in India. Now imagine calling your bank and talking to someone overseas.
Top banks including JPMorgan Chase and Bank of America hiring foreign workers to process your account. Just last April, 3 Citibank employees arrested in India for stealing $350,000 from U.S. customers. Despite the risks, more and more banks are sending work overseas, and if they haven't outsourced yet, they are seriously considering it. We invited these banks to appear on The Money. They all declined. A spokesman from Bank of America says the company has 2 sites in India with 1,500 employees, and just last month, JPMorgan Chase announced plans to double its number of employees in India to 9,000. A recent Deloitte and Touche study estimates 10% of US bank employees work outside the country. This number expected to jump to 20%, that's 2 million people, by 2010.
Well, we turn now to an identity theft expert, Robert Siciliano from IDTheftSecurity.com. Robert, just because they're overseas, does that mean that you're at risk?
Well, the issue here is that the security may be a little more lax overseas, mainly because they don't have the same system of law and government as we do, so they don't fall under the exact same guidelines as we do either.
So why are the banks then allowed to handle US data that has US laws to protect it, we hope, and allow that data to be dispatched and handled in places where those protections are not afforded?
Well, ultimately, with major breaches of data like had occurred back in the spring, you're going to see more and more pressure applied to these banks, and they're going to have to conform to U.S. laws.
Pressure? I mean, they're adding bodies.
Right. Well, ultimately, like it has exploded in the United States over the past year with the major breaches of data, if and when that happens overseas, you're going to see U.S. government putting pressure on foreign governments and on American banks to strengthen their policies.
I mean, I don't know, this reminds me of the cell phone story we've been following, but we already have the theft, right? I mean, I don't know what we have to see in order for people to actually do something about this. How bad does it have to get?
Well, like you can see what is happening in the US, it has to get even worse. It's pain that motivates these corporations to make significant change. That's what happens. And so you're saying the corporate viewpoint is, listen, the customers are fine, As long as it's not costing the bank all that much money right now, they're going to continue with these processes, with these bank processing centers overseas where it is much, much cheaper. And until it hurts them domestically, they're going to continue like it's business as usual.
All right, Robert, thank you very much for your time, sir.
