CSU Long Beach
ENGR 350
Computers, Ethics, and Society

Syllabus
Schedule
Grading
Portfolio
Homework:
  Guidelines
  Standards
  1 - Images
  2 - Risks
    -- example
  3 - Infobahn
    -- example
  4 - Dataveillance
    -- example
  5 - Worklife
    -- example
  6 - Killer Robot
Term project

Homework #2 - example

Note for UCI - ICS 131: The first two grading categories are combined into one at UCI.

Writing:
5 __Spelling and syntax errors caught by Word (max. 5, -1 per error)
5 __Other errors (e.g., word usage), not caught by Word (max. 5, -1 per error)
10 __Readability and organization (10 max.)
10 __Relevant and correct use of sources (10 max., 0 here may mean 0 on the assignment).

The term ‘electronic banking’ is actually two distinct services but they are usually advertised as a package deal. The first component is online banking, a service that allows you to check your balance, transfer funds between accounts, and reconcile your checkbook directly with the banks records. Part two is online bill paying which transfers requested amounts from your account directly to the people you buy goods and services from. If the person or business you wish to pay is not equipped to receive a direct transfer then a check is printed and reaches its destination via U. S. Postal Service. I have waited several years to try it out because, basically, I am a chicken. I am never the first one on the block with the new toy because experience has taught me that new products are always overpriced and replete with minor annoyances and inconveniences. Recently, I took a deep breath and decided it was time to enter the world of electronic banking. It has now been around for at least ten years and I have a couple of friends who are satisfied with their established online accounts. Unfortunately, I made this decision before reading Neumann’s Risks of Technology [1] where he lists a set of aphorisms proposed by Jerry Mander [2]. I thought it would be interesting to walk through a few of them and see what I have gotten myself in to.

Since most of what we are told about new technology comes from its proponents, be deeply skeptical of all claims. OK! The proponents of online banking are the banks, software developers, Internet service providers, and hardware manufactures. Banks currently have the largest stake in the game. Their standard pitch is that online banking and bill paying will save me time and money, give me more access and control of my accounts, and that it is easy to use and very safe. Union Bank’s Bank@Home service was my choice because I already had every thing I needed: Quicken [3] and America Online [4]. I guess I will tackle those claims in the order mentioned. For my pattern of usage, I don’t really think it saves me all that much time. I have been keeping my check register and credit card accounts in Quicken for a couple of years now so I am already used to the process. The only real difference is that my register is now reconciled automatically any time I link up to the bank. I keep very good records so no big savings there. The good news is that, at least in the short term, I will definitely save money. My previous bank charged me $10 a month for the privilege of maintaining a checking account with them. Then I spent on average $3 a month in postage stamps to mail my bills. That’s not even mentioning the occasional non-branch ATM fees I had to pay. In contrast, Union Bank gave me $50 just to sign up for their Bank@Home service. Included in the deal is: 10 online account sessions per month, 4 free non-Union Bank ATM transactions per month, no monthly service charge until the year 2001, and one year of free online bill payments (25 bills per month). After the first year the bill payment service will cost $4.95 per month. When you add it all together, I will save more than $400 over the next three years. On the topic of access and control, once again, in my case, there are no real gains. There is not a whole lot that I can do now that I couldn’t do before with the 24 hour automated phone service (i.e. check my balance, transfer funds, check for cleared transactions). In defense of their claim though, I have a friend that has been helped greatly by this service. Katherin’s finances were always a mess. She couldn’t balance her checkbook and there were always lost ATM receipts and financial crises. Now she almost lives within her means. Ease of use is very subjective but because I was already familiar with the financial package I found it to be very easy albeit a little bit scary. The consensus, in the various magazines articles that I have read, seems to be that safety should not be a great concern to the user as long as the bank utilizes encryption techniques to safeguard your personal information and limits your liability in the case theft or fraud. Union Bank does cover that topic in the service agreement that I received. As long as I report the fraudulent activity to them in a timely manner then I will only be liable for a maximum of $50. So I guess I made out all right on that point. I intend to keep a close eye on my balances. I am a little concerned that I found no mention of data encryption. Then again, my personal information never really has been private! Stephen Wildstrom [5], in his article, Do’s and Don’ts of Cyberbanking, makes a much broader statement on the subject. "Bank’s have a lot more at risk than their customers, so if it’s safe enough for them, it’s safe enough for us." I’ve heard that before!

The fact that technology has a natural flash and appeal is meaningless. Negative attributes are slow to appear. That is exactly why I waited so long to join the party. I have friends who enjoy being guinea pigs so I observe and learn from their experiences. I am going to have to break the consideration of negatives into two parts. Online banking is so similar to the banking by phone that I have been using for several years that I don’t foresee any big problems. That said, I don’t know enough about ‘hacking’ to fully understand the risks posed by computer piracy. Online bill paying, on the other hand, has some documented bumps in the road. To begin with, some payees are equipped to handle direct payment and some are not. Unfortunately, you don’t know ahead of time which case will be true. If you are used to playing the ‘beat the bank’ game then you might become frustrated with this service. The problem lies in the time lag between the date that the payment is authorized to be made and the date that your account is debited. If the payee can receive an electronic transfer then your account is debited the same day. In the second case, the payment service types up a check and mails it to the person or business. This can take about four days and is not reflected in your account until the check is cashed. There is also a chance that the payment will arrive and be cashed early. There is one additional problem. There is not a coupon or an invoice included so the receiving business may require more time to process the payment or may be confused and improperly handle the transaction. I found a very cute quote about online banking in a 1996 article in Popular Science [7] magazine that really explains the problem well. In a conversation with a representative from the billing department of a cable TV company the customer was told, "Well, we have no record of your payment but we did cash your check." Almost two years have past since that article was written and the situation has improved. None of the friends I questioned had experienced a company that could not figure out how to credit their account properly but they did mention the possibility of delayed credit to some accounts. I tend to stay ahead of my bills by at least one paycheck and I also have overdraft protection so there is no reason to try to delay payments until the last minute. Therefore, I will not be greatly affected by this slight inconvenience. As this service becomes more popular the business community will become familiar with and prepared for this type of payment.

Never judge a technology by the way it benefits you personally. Seek a holistic view of its impacts. The operative question is not whether it benefits you, but who benefits most? And to what end? There is no doubt that, in the near future anyway, the banks stand to reap billions from decreased costs per transaction and the marketing of high end services like mutual funds and stock brokerage. Thomas Hoffman [6], in his article, Bankers wait for online profits, states that it costs banks a penny verses a dollar when comparing an electronic transaction with one where a teller is involved. This is also evidenced by the fact that most banks charge you less per month when you agree to use their indoor "express deposit" boxes or their ATM machines for the majority of your banking transactions. Another place I think they will benefit is in their advertising costs for all of their peripheral products and services because they will, no doubt, appear on the opening screen of the bank’s mainstream services. The sad part is that, even though the banks will profit from this technology, you can be sure their employees will suffer. It is the tellers I am referring to. They already receive reasonably low wages and are increasingly forced to accept part-time working hours so that they are not eligible for insurance and other benefits. I am sure that electronic banking will cause tellers to be laid off like happened when ATM machines burst on to the scene.

Eschew the idea that technology is neutral or "value free." Every technology has inherent and identifiable social, political, and environmental consequences. Several possible social consequences come immediately to mind. One will be the further reduction of banking jobs that began with the wide spread usage of ATM machines. This affects not only the employees and their families but also the bank user who will have an increasingly hard time getting personal assistance with banking matters. There is another potential and disturbing side effect that occurs to me. Might this cause further separation of the economic classes? Suppose some or most businesses stop accepting currency in favor of electronic money. Where does that leave the large percentage of low-income households who do not use bank services? They might be forced into the additional expense of maintaining an account. Illiteracy would also seem to inhibit ones access to computerized services.

Well, all things considered, I don’t feel too bad about my decision to sign up for online banking. I am not sure that it does or will add to the quality of my life but it is kind of fun. From my naive perspective it seems reasonably safe especially since I already use credit and debit cards on a regular basis. I do know that after my three-year free checking is concluded my decision to stay with the program will depend on how it costs and how safe I feel.

REFERENCES

1. Neumann, Peter, "Risks of Technology", in Rob Kling’s Computerization and Controversy: value conflicts and social choices, 1996

2. Mander, Jerry, "Communications of the ACM", 36(3)(March, 1993), p. 130

3. Intuit’s Quicken ‘98 for Windows is a financial software package

4. America Online is an Internet service provider

5. Wildstrom, Stephen, "Do’s and Don’ts of Cyberbanking", in Business Week, September 29, 1997, p. 19.

6. Hoffman, Thomas, "Bankers wait for online profits" in Computerworld, December 8, 1997, p.14.

7. O’Malley, Chris, "Wired to the Bank" in Popular Science, June 1996, p.97