BS&T: On what key areas will you focus as executive director of the FSTC?
Schutzer: My focus will be to keep the collaboration and chemistry going among bankers, vendors and others in the industry. Because we are all competitors to some degree, FSTC addresses those technology problems where it is clearly in the best interest of all parties to collaborate, such as in the areas of payments, security and business continuity.
In a world where our supply chain includes not only our suppliers but our competitors as well, we have to cooperate and collaborate even on fundamental technology infrastructures -- the underpinnings from which we all operate. FSTC's recently announced Enterprise Architecture Standing Committee has generated a lot of industry interest, and we continue to work with our other standing committees in payments, check imaging, security and business continuity.
My role, and the role of FSTC, is to get everyone together to try to solve problems of common interest. Industry organizations such as FSTC need to do a better job at facilitating this type of collaboration.
BS&T: What technology issues will the Enterprise Architecture Standing Committee address?
Schutzer: Some of the broad topics this committee will focus on include service-oriented architecture (SOA), open-source software and outsourcing. Years ago we wouldn't have been able to create this committee because people felt that their infrastructure and architecture were their own and proprietary. But in this day and age, we need to interoperate.
BS&T: What technologies have helped transform the financial services industry? What emerging technologies will transform it going forward?
Schutzer: The most recent transforming technology is the Internet -- it has fundamentally changed the way we do banking. It has changed the delivery channel, and Web technology has even influenced older delivery channels such as ATMs and branches. The Internet is only just now maturing. As it matures, it will present us with good challenges as well as some bad challenges, such as Internet crime and fraud. FSTC has many initiatives to address those challenges.
We'll continue to feel the effects of the Internet, and we'll start to feel the effects of the growth of the mobile world, including cell phones, PDAs and other wireless communications devices. Wireless is where the younger generation is at -- if you want to service the younger generation, you will need to deliver services over mobile wireless channels.
BS&T: How long will it take for mobile technologies to be commonplace in financial services?
Schutzer: There is no doubt that cell phones, data and Voice over Internet Protocol (VoIP) will all converge. This will greatly impact our infrastructure, our services and our efficiency. But it will happen slowly, with new niche capabilities being offered. And, as we've seen with other new technologies, providers will then attempt to improve and streamline the way we do banking today. Usage will grow, and, finally, mobile technologies will actually change and improve our behavior. Mobile technology also will drive globalization and produce changes that can be problematic, such as the ability to create a job in any part of the world.
BS&T: Is the financial services industry up to the challenges that mobile technology and globalization will bring?
Schutzer: We've survived many challenges through the years, and I'm sure we're up to this challenge. These challenges will highlight the need for collaboration and increase the value that associations such as FSTC bring to the table as they help the industry work together.
Collaboration is particularly important because we no longer own our customers' infrastructure the way we did in the past. Customers don't always go to an ATM or to a teller in a branch. They do business on their PCs, which the bank didn't buy. They do business on the phone, which the bank didn't buy, with a service provider the bank didn't select. We don't have control over the entire environment, so we need to work together to ensure that we still provide the high-quality, trustworthy services that our customers want.
BS&T: What are the major issues around security? How is the FSTC helping the industry prepare for these challenges?
Schutzer: There are so many issues around security at which FSTC is looking. FSTC's multifactor authentication project is addressing how we can improve our original capabilities of customer and financial institution authentication to handle the increased number of people online. The Federal Financial Institutions Examination Council's (FFIEC) guidelines will propel two-factor authentication, and we're focusing on ways of making authentication better and easier for the customer as well as achieving better authentication of our own Web sites and e-mail.
We try to be ahead of the curve. For example, even before the FFIEC guidelines came out, FSTC was working on a counter-phishing project that grew into a multifactor authentication project. We characterized the phishing life cycle and pointed out the need for stronger authentication as one component to counter phishing. We also pointed out that phishing encompasses more than an e-mail that tries to fool customers into providing their personal information, but can also include key loggers that capture IDs and passwords by sending bank customers to a bogus site.
We also worry about identity theft and the vulnerability of the information we need to collect to identify new customers. We have to address our reliance on PCs, the networks and software, which seem to be plagued with bugs and errors. It seems that we are constantly doing a patch, and sometimes it's too late.
BS&T: Will biometrics, such as iris recognition, play a role in two-factor authentication?
Schutzer: I don't want to push one technology over another. We address many technologies within our counter-phishing and multifactor authentication efforts. But it is clear that the most secure and easiest to deploy authentication technology is some combination of behavior detection and tokens -- the technologies that have been around the longest and that we are focusing on the most.
Technologies such as biometrics will continue to progress, but you'll see financial institutions deploying the easiest technologies first as a quick, effective way of adding two-factor authentication. Depending on the nature of the transaction and the type of information being transmitted, three-factor authentication also could be used. It's all risk-based and runs the gamut from very little authentication to very strong authentication.
BS&T: Is it an exciting time to be working on these types of industry issues?
Schutzer: Yes, and it's really interesting that when you get a bunch of people together to work on a problem, barriers go down and people work together as a team, even if they are competitors. **--Lisa Valentine
When he took the job as executive director of the Financial Services Technology Consortium (FSTC) in February 2006, Daniel Schutzer knew what he was getting into, having been involved with FSTC since 1991 as a member of multiple committees and recently as a member of the board of directors. When the call came from FSTC, he found the opportunity "seductive." Before taking the helm of FSTC, Schutzer was senior vice president and director in the Enterprise Technology Office at Citigroup (New York, N.Y.). Today, he's looking at ways he can help the industry put aside any competitive differences and work together to solve issues that affect everyone.