As Bank
Jobs Go Abroad, Are Records at
Risk?
Patrick Jonnson
January 6, 2006
The Christian Science Monitor
Following
are excerpts from an article that
appeared in the January 6, edition
of The Christian Science Monitor.
ATLANTA – First, US textile
jobs were shipped to the Orient,
then customer service call centers
for American companies cropped up
in Manila. Now the back office of
the corner bank is being hauled to
Bombay and Bangladore, India.
From SunTrust in Atlanta to Bank
of America in Charlotte, N.C., banks
are hiring overseas shops to stay
competitive, be more efficient, and
have access to cheap labor.
But as more accounting and investment
banking is being sent overseas, the
result is that Americans' personal
bank accounts are increasingly susceptible
to theft and fraud, some experts
say.
Other top banks such as JPMorgan
Chase and Wachovia are also at the
forefront of offshoring.
Last month, JPMorgan Chase announced
it expects to double the number of
Indian employees to 9,000 people
by next year. Currently, about 10
percent of employees of US banks
work outside the country. This number
is expected to rise to 20 percent
- or 2 million people - by 2010,
according to a recent Deloitte & Touche
study.
"The new frontier is back-office
processing done offshore," says
Bob Olson, CEO of Dallas-based Carretek,
a contractor that runs back-office
shops for banks in India.
Banks also now have the technological
means and regulatory go-ahead from
the federal government to do offshoring,
says Mr. Olson, because of the Banking
Modernization Act in 1999.
US banks attributed $19 billion
in losses from fraud in 2004, according
to TowerGroup, a financial services
research firm in Needham, Mass. Some
expect more red ink with offshoring.
"Security can of course be
an issue even in the US, but it is
potentially an even bigger concern
for offshored work," says Norm
Matloff, a computer-science professor
at the University of California at
Davis, in an e-mail. "Typically,
developing countries do not have
the sophisticated security protections
which we have here."
To be sure, Wachovia and Bank of
America say foreign workers will
get only partial access to accounts
- never the whole file.
Banking experts also say that risk
management is what banks do better
than any other industry, and there's
been little consumer backlash to offshoring.
By hiring firms that monitor workers'
activity, bankers say their overseas
operations can withstand audits from
the Federal Reserve. And if there
are problems, banks can cover the losses,
says Paul Stock of the North Carolina
Bankers Association in Raleigh. |
