Financial privacy

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Financial Privacy is a blanket term for a multitude of privacy issues:

  • Financial Institutions ensuring that their customers information remains private to those outside the institution. Issues include the Patriot Act, and other debates of privacy vs. security.
  • The term is also used to describe the issue of financial institutions selling customer information to other companies so that those companies may use that for marketing, and especially telemarketing purposes. This issue however is mixed with the issue of financial institutions sharing information within themselves, which could be considered "sharing information between companies" or "affiliate sharing" since a financial institution is not allowed to be one company for regulatory reasons, but instead must assume a holding company structure. This sense of the word has been the main issue debated in the United States during the 21st century.

Debates on the first sense of the phrase have many different points of view, from crypto anarchists who want to create a completely decentralized and anonymous banking system, to others who support enhancing the power of the government to find financial information in order to fight terrorism.

However, the majority of the debate in the United States involves the second sense of the phrase. The same anger against telemarketers which led to the United States National Do Not Call Registry also was focused on what some alleged to be the source of many of the telemarketers leads: financial institutions selling things like balances and transaction information to telemarketers. Financial services companies, those that offer both banking, insurance, and investment products however say that the issue and attempted legislation on the topic was brought on by smaller financial institutions who simply focused on one type of product or business. The reason for this is that combining all those products with one company creates a Wal Mart style economies of scale and other synergies which are difficult to compete against as a single product line company. By putting forth legislation which forbids financial institutions from sharing information with other companies, single-product-line financial institutions could cripple integrated financial services companies because of the technicality that the banking, investments, and insurance parts of the business had to be operated under separate company affiliates within a holding company. Most financial services companies claim that they never had sold information to non financial services companies. Some critics of financial institutions agreed with this analysis but continued to press for the legislation because they believed that the financial services integrated business model was fundamentally wrong; however the vast majority of critical articles focused on the issue of selling information to outside telemarketers.

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