By Elizabeth Wasserman

Aug. 1, 2006—Citigroup, the nation's largest financial services company, reported in June 2005 that backup data tapes containing personal information on 3.9 million customers were lost by UPS during transport to a credit bureau. Citigroup—like ABN Amro, Bank of America and Peoples Bank, which also lost backup tapes last year containing personal information on millions of customers—had to notify its customers of the potential privacy breach under a series of new state laws. Analysts estimate it costs companies up to $1 per notification letter, but the loss of data tapes also can tarnish a bank's brand and put customers at risk of identity theft.

It became clear to the financial services community that a better system was needed to keep track of these valuable computer tapes. A few of the world's largest banks are currently involved in pilots or discussions to see whether RFID can help them safeguard the tapes. The financial services industry is similar to other businesses adopting RFID—such as retail, aerospace and pharmaceuticals—in that it is interested in tracking shipments of physical goods. In addition to backup tapes, financial institutions are testing the use of RFID to secure shipments of currency, bearer bonds, gold and checks from loss or theft.


Banks and credit card issuers are already using RFID technology to offer contactless credit cards or prepaid debit cards, which can speed payments at convenience stores and gas stations. In the past year or so, American Express, Chase, MasterCard and Visa, among others, have rolled out contactless payment systems in select markets around the world (see "The Cashless Reality," July/August 2005).