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PCBB Banc Investment Daily August 28, 2013
Banc Investment Daily
August 28, 2013

Are You Cranky or Nostalgic?

Look into the mirror and ask yourself whether you are a cranky old fart. Are you one of those people who dreams of earlier times and complains everything was better in the past? To be sure, there is the basic state of crabbiness we all succumb to at times and then there's nostalgia. We find the best cure for crabbiness is to go outside for a walk. Nostalgia on the other hand is a more serious condition and believe it or not was once considered a psychopathological disorder. The syndrome was described in a 1688 Swiss medical journal and was treated as a disease from the 17th through the 19th century. Many sufferers were soldiers fighting in foreign lands and the records document some dandy cures. One Russian general had nostalgia sufferers buried alive (there were no new cases reported after the first one or two), while the US Army during the Civil War shifted to public ridicule and bullying as treatment.
As you get older, it is natural to dream of the good old days. Remember when you could price a loan for a good customer using a healthy spread to Prime using the back of a napkin over a three martini lunch, plug in 1.25% to come up with the correct number for the bank's ALLL and the concept of a stress test had only to do with one's cardiac health. In general, things were a lot simpler back then. Today, it's a wilder, riskier world, so some crabbiness is expected.
As you worry about the complexity of running a bank today, know that many customers dream of older, simpler times too. Just the other day, logging into our bank account on the internet, there was a new set of requirements just to enter the site. These included a set of questions, plus an updated more complex username requirement. A numeric code was also delivered via text message that had to be entered into the site before proceeding to the account. Consider that this was an existing account of many years with a history of daily access to balance accounts. Thankfully the system did have the ability to mark a customary computer as a trusted access point, but the number of steps and complexity increased our crabbiness that day.
We realize this is all well-meaning and customer security on banking sites has to be top priority. However, a process this complex is also a royal pain for customers. People have migrated to online banking for convenience and ease of use. Security is expected with efficiency and retaining customer loyalty is dependent upon meeting both expectations.
We certainly don't minimize the risks. Hackers only grow more sophisticated, so most people manage multiple passwords that have to constantly change. Given the sheer number of passwords one has to remember, not writing them down is impossible. The good news is that electronic theft is a more likely scenario than the loss of a physical password list.
As our example points out, perhaps we have reached the tipping point on the whole concept of passwords. Many sites now require a second level of password or code and security is important, but what is a reasonable solution? Using an IP address as in the example above (when it marks your computer as trusted), in addition to a password is a start but is it enough? Two-factor authentication that sends a code to a mobile phone in addition to a password may be safe, but it can be problematic. To avoid perpetual customer crankiness, banks must seek security solutions that are less inconvenient or cumbersome.