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How to build security and brand trust on the Internet


February 22, 2005

From borrowing money and general banking to figuring out their taxes, more and more consumers are becoming comfortable with managing their finances on the Internet.

A trusted organization in the online financial services marketplace is e-Loan Inc. The company was founded in 1996 and experienced several years of important growth, culminating in one of the most successful initial stock offerings of 1999.

Despite the dot-com bust, e-Loan survived and continues to thrive. It's now considered one of the nation's leading online lenders, having funded more than $22 billion in consumer loans and served more than 300,000 customers.

Recently, I interviewed E-Loan CEO Chris Larsen about the importance of trust to his company's success.

Do you think that E-Loan is a trusted enterprise?

The bar is much higher for Internet companies because many consumers are still uncomfortable about entering their personal information online. This makes it even more important for us to be at the vanguard of privacy and security practices.

From the start, we have made privacy and information security a No. 1 priority for the company. We believe [it's important to give] consumers the confidence that we will never sell their information to marketers or share their information with third-party vendors without obtaining their permission first.

We believe our efforts in the privacy and security arena have culminated into E-Loan being a trusted enterprise. Perhaps the best evidence of this was shown in the independent privacy survey conducted by the Ponemon Institute and Truste, which ranked E-Loan as the most trusted pure online financial services company.

How important is stakeholder confidence and trust to your mission as the CEO of E-Loan?

The CEO is also the chief trust officer. If this wasn't an obvious fact to CEOs before Sarbanes-Oxley, it is absolutely apparent today. The tone of a company always starts from the top. If the senior management of our company doesn't have the respect and confidence of employees, customers, shareholders and business partners, they can't fulfill our mission.

How do you and your team identify and manage various risk factors that can diminish trust?

There are always business risks in our environment. In reality, we aren't perfect at identifying all the risks and vulnerabilities that seek to harm us -- no company is. The key for us is to identify the most significant risk areas to our business and our customers. Once identified, we continuously monitor the environment to make sure the company has controls in place to reduce our exposure to salient risks.

How important are enabling technologies to creating trust?

Because E-Loan does most of its business on the Internet, it's no secret that we are dependent on a well-functioning, highly secure technological platform. Our IT professionals work very hard to maintain an almost fail-safe environment. To achieve extraordinary IT performance, we make significant investments in enabling technologies that allow us to keep information security risks to a minimum.

Our team is always looking for tools or programs that can help them aggressively prevent, detect or quickly correct security risks, such as external penetration by hackers or insider problems such as malicious employees. We also work with outside auditors to provide an independent set of eyes to make sure that we are "walking the walk" with respect to our security and privacy policies.

How important is transparency and visibility of security and privacy practices to trust?

This question is difficult to gauge. We don't tell outsiders too much about our security practices because this disclosure might tip our hand to bad guys.

However, our privacy commitments are very visible. For example, we work with other companies and trade organizations to promote transparency and consumer choice with regard to their personal information. We also engage the leading trust-seal organization, Truste, to provide assurance that we are in compliance with our posted privacy and data-protection policies. We also have a fully dedicated privacy officer. Every day, she receives calls and e-mails from consumers who want to know how their information is used, shared and protected. We respond to all inquiries promptly and with full candor.

E-Loan is very proud of its stance on security and privacy issues. If fact, we were the first online lending company to have a third-party privacy audit. Recent studies suggest that this differentiates E-Loan from other online lenders and brokers in terms of trust and confidence.

With respect to transparency, an interesting issue happened several months ago. We are always looking to reduce costs in our operations. We identified outsourcing opportunities with very-high-quality vendors in offshore locations like India. Before outsourcing, we made sure that the selected vendors provided privacy and security standards that were consistent with our own. Our concern, however, was the reaction of consumers. Would the public perceive outsourcing as a diminishment of our security and privacy commitments to them?

Rather than nixing the idea because of negative consumer reaction, we decided to inform them about our decision to outsource. We also gave consumers the opportunity to choose. The prime benefits of outsourcing are cost and time savings.

We articulate these benefits to customers so they can make an informed choice about electing to participate in our outsourcing program. If the customer elects not to outsource his transaction, the transaction is handled domestically. We discovered that most customers viewed this disclosure and their ability to choose the outsourcing alternative as an excellent program. Our approach has received positive endorsements from California legislators, federal administrators and major media, including CNN [Lou Dobbs Money Line].

How do you ensure compliance with regulatory requirements such as Sarbanes-Oxley and various data-protection laws?

Frankly, we didn't need Sarbanes-Oxley to know that good control practices and safeguards are important for the company. Other public companies are now facing serious compliance problems because they failed to see the value of good security. We know that regulatory compliance is just a minimum bar to what we need to do to earn trust and confidence.

At times, regulations on privacy or data protection are very complex or vague. We do our best to understand the law and the operational rules. When in doubt, we err on the side of conservatism. Our belief is that the customer or employee data in our possession is entrusted to us. We are obligated to maintain a high degree of stewardship over these assets as a company.

Note: This interview was conducted as part of the Unisys Security Leadership Institute's research series on the trusted enterprise. E-Loan was selected by the SLI as a company that "walks the talk" in making good security and privacy practices a core part of their business.


Article by Larry Ponemon,
Source: Computer World



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