The Credit Union Journal's Reader TECH Questions

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Reader Question #1

What are the strategies for implementing aggregation that is directly connected to a CU's database rather than to a third party's system?

Jim Hutchins, re:Member Data Services, Indianapolis.

An effective, cost efficient way to accomplish the goal of aggregating data directly from your institution's database is to use your data processor's available tools to allow third-party aggregation software to seamlessly integrate with your core system. Tools such as ODBC or an API, that gives access to data and business logic, make the aggregation process quick, transparent to your members, and reliable. RDS, for example, supports this kind of integration through a real-time service offering called Cyber.

Credit unions with a membership base suited for aggregation services should strive to become your members' central point of contact for all aggregation services. Serving as the central aggregation point prevents losing contact with members who visit other aggregation sites to access their credit union accounts. Maintaining this relationship with your members can also provide valuable marketing opportunities and the ability to influence your members' financial decisions.

Dick McConnell, Aftech, Malvern, Penn.

For a credit union that wants to offer aggregation without sharing member data with a third party, there are two options:

1. CU members are becoming their own aggregators, by using one of the off- the-shelf money management PC packages such as Microsoft Money. The aftech@net home banking product allows the member to download files into a number of these products by extracting real time data directly from the CU database. This includes all share, CD and loan data maintained by the CU.

There are some cautions involved: for example, some third-party vendors charge the data supplier (in this case, the credit union) to allow the members to download data into these packages from the Internet.

2. The Credit Union can become an aggregator via the Internet display. This option means that the CU must somehow obtain and maintain the total financial relationship of the member. With this decision comes the ominous task of developing relationships with a myriad of other financial organizations that simultaneously hold accounts of your membership.

However, and at the very least, a CU should assure that in any relationships formed with organizations such as mutual fund vendors, an agreement is reached that allows those relationships to "aggregate" through the CU via real time or periodic updates. This means that the data would reside at the CU somewhere in a database probably built specifically for this activity. In some ways, products like virtual loans allow integration of card data or mortgage data that might be processed on either the same or different systems.

Reader Question #2

We are going to build three new branches before year-end 2004. Is it right to assume wireless technology will become a standard and that it will be supported by vendors? Are there any issues related to the physical structure that might impede the effectiveness of wireless, and as is the case with every new technology it seems, what about security? Are there risks from someone parked in our lot, etc.?

Randy Brinks, WESCO Net, Kentwood, Mich.

We are not endorsing wireless (802.11b) technology as enterprise wide solution at this point in time for several reasons;

1) The WEP (Wired Equivalent Privacy) encryption technology outlined and implemented by the 802.11b standard was cracked shortly after the standard's release. Even if the business is using this encryption, a user sniffing the traffic can crack the keys after gathering enough data.

Risk can be mitigated by using MAC filtering (however, tools are available to circumvent this). This risk can be eliminated by implementing VPN over 802.11b which are proprietary, vendor specific solutions. They are also relatively expensive at this point and the configuration requires a thorough understanding of VPN and encryption technology (no matter what the vendor claims). Changing keys frequently (hourly) will certainly reduce the risk, however most Access Points do not have the ability to change keys dynamically.

2) Current wireless is subject to environmental influences. Walls, atmospheric and electronic equipment will affect the range and signal stability. It's one thing to have a signal drop or degradation in the home, it's quite another when a teller's workstation is disconnected in the middle of a member's transaction.

3) Audit. How do you know your Wireless Access Point (WAP) is enforcing your security policy properly and not "bleeding" out into the parking lot or adjacent apartment complex? Is this acceptable risk to take in a business which relies on the utmost degree of member data integrity? It is if the security policy outlines audit procedures and testing intervals. Many businesses do not have the staff or talent to due diligence on policy.

4) 802.11b wireless has speed problems even at full speed. It's slightly faster than a 10mg network hub. The other problem is that is has the same weakness as a network hub, only one machine can 'talk' at a time. If more than one tries to send data simultaneously, a collision will occur and all transmissions will be temporarily halted on the network. Large file transfers can take considerable time on a busy network.

With proper security, wireless has it's place in the enterprise. Board rooms are a great example of where a wireless network can come in handy.

Executives with laptops have the ability to connect to the network during meetings for taking notes or performing 'live' research on the Internet or LAN and keeping up with email.

Dick McConnell, Aftech

Wireless technology in the financial services environment is not a future technology. It is in use in multiple applications all over the world, even though there are issues related to technical capacity as well as security. As any cell phone user knows, wireless is sometimes subject to interruption because of topography, interference, etc. It is also susceptible to interception. Nonetheless, it can (and should) be used where it is the technology that best suits business needs.

Generally speaking, the use of wireless technology is not a core processing issue but a hardware, communications and networking issue. Because of the technical complexity and the potential security issues, make sure you use reliable vendors.

Jim Hutchins, RDS

Wireless networking has become a standard and is in wide use throughout the country in homes and businesses of all sizes. However, because wireless connections are not as fast, secure, or reliable as wired connections, most sites use a mixture of both technologies.

While manufacturers of wireless equipment often list long effective ranges in their product literature, in practice, the effective range and the reliability of wireless can be reduced significantly by building structures and other devices broadcasting at similar frequencies. Typically this means that you will need a few more access points than the theoretical range implies.

Because wireless networking doesn't require a physical connection, it is not as secure as a wired connection. However, there are many techniques for making it secure enough to use. The most reliable way to handle its administration is from a hardware-physical infrastructure perspective.

By carefully implementing and maintaining appropriate security measures, wireless networking can be used safely within a financial institution.

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