Privacy as a Marketing Tool

Most banking executives view customer privacy protection as a compliance issue rather than as a source of comparative advantage. Only 21 percent of executives surveyed by KPMG last fall viewed privacy as a marketing tool. According to Steven M. Roberts, a principal partner in KPMG's national regulatory practice, these results were "disappointing" because they indicate that banking leaders don't sufficiently recognize the marketing value of a strong commitment to privacy and privacy safeguards.

One firm that is trying to capitalize on this potential is Toronto-based Royal Bank of Canada. Its U.S. affiliate, operating under the brand name RBC Financial Group, is offering a suite of privacy protection products to its online customers. In a pilot study that began last September, RBC offered five online privacy and security tools, free of charge, to 1,000 customers. Peter Cullen, Royal Bank's chief privacy officer told the American Banker that the tools "are intended to make customers feel better about being online and about RBC." The products signal to customers that the bank is committed, beyond its legal requirements, to protecting the privacy of its customers.

The online tools are being provided by Zero-Knowledge Systems Inc. The tool suite includes the following:

• A personal firewall to protect users from unwanted invasions into their computers

• A "cookie" tracker. Cookies are small bits of computer code that are placed in a users' computer when the user visits a website. Cookies are used by website operators to identify and recognize repeat visitors, and often to store their preferences. But, they can also be used to track and record the users' visits to other websites. The RBC cookie tracker lets users consolidate all of their cookies in a "jar" where they can be deleted or retained.

• An ad manager that blocks unwanted ads from appearing on the screen

• A keyword alert that sends a warning whenever personal information is sent from the users's computer.