What Do Banks Do With All Your Data and How Can You Protect It?
In this digital age, we trust much of our personal information to virtual platforms like banks. To open an account, you must provide your full legal name, residential address, date of birth, email and phone number. Certain functions, like getting a credit card, require even more information, including your social security number (thus access to your credit reports), annual income and employment history. With so much data and the ongoing fear of hacks and identity theft, you might wonder about the extent of your bank’s access to your information and what you can do to help protect it.
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Uses and Limitations
Banks are allowed to share your data with their marketing partners, typically with the end goal of improving internal processes based on relevant customer demographics and usage patterns. For instance, a bank wants to know if a certain age range makes up a majority of its users.
In many ways, having your bank have access to your personal information is mutually beneficial. It helps prevent a criminal from opening an account in your name or accessing your existing accounts. And the more information the bank has on you, the more difficult it is for someone else to pretend to be you. Still, there are limitations and how banks are allowed to share this information.
The Gramm-Leach-Bliley Act of 1999 prevents banks and other financial institutions from disclosing your nonpublic personal information to companies not related to them. In the end, though, it’s necessary for them to access relevant information when determining credit eligibility and to help prevent fraud.
Protecting Your Data
As a general rule, banks maintain strong security measures to increase public confidence, which ultimately helps them thrive as businesses. Even with excellent levels of security in place, hackers are always trying to stay one step ahead. Because banks are part of a larger, interconnected system, a cybersecurity risk is still possible.
Fortunately, there are some key ways to help protect your data that have become increasingly commonplace. You have the option of two-step verification (also referred to as two-factor or multistep authentication). When you sign in or attempt to make changes to an account, the bank will require not just a password but also a code sent to your email or phone number. While it does make signing in take slightly longer, there’s never a scenario where it isn’t worth having the added level of security. Just make sure the same security also applies to your email accounts and such — for a well-rounded approach to data protection.
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If someone attempts to access your account and is unable to get in, they would be forced to verify some other way, which is where your security questions come into play. These are by your design and aren’t nearly as easy for a hacker to determine. Whether or not they attempt and fail, you and the bank will be made aware of the attempt and can choose how to proceed.
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This article originally appeared on GOBankingRates.com: What Do Banks Do With All Your Data and How Can You Protect It?
