Wednesday, April 11, 2007

Personal Finance 101 

As many of you know, I teach a Management Information Systems course in the Cities. For my last lecture I cover futures and security issues related to information systems within organizations and outside the work place.

Last evening included a discussion about software (SW) systems designed to catch fraudulent use of credit cards. As background, consider the following volume of textbook data: Visa has distributed 1,000,000,000 cards, handles $2,000,000,000,000 in transactions/year for 21,000 financial institutions. They rarely make a mistake. However, others can steal the credit cards. Then a student commented, "You know, the MNSCU system is considering mandating Personal Finance 101 for all freshmen."

J (me) - How many of you think this course is necessary?
S (students) - Almost all raised their hands.
J - How many of you would take the course?
S - Two raised their hands.
J - OK, if you think it's necessary for others to take it, why won't you take it?
S - Those freshmen need it; we can handle our finances.
S - We figured out how to use the system.
S - But those banks keep pushing credit cards at you and you spend and you get in debt and it's the bank's fault.
J - Oh? Who used the credit card?
S - Well it's their fault
J - Really. What did you do about it?
S - I got rid of my credit cards.
J - Problem solved - YOU solved it.
S - Well, yes, but....
J - OK, how many of you figured out this credit card problem through the "school of hard knocks?"
S - Over half the class raised their hands.

Our students' average age is mid to late 20's. They learned personal responsibility the expensive way and it tickled me no end that they didn't need the course but "those freshmen did."

Finally I described how financial institutions have put in place a number of automated SW security features to react to charges outside a cardholder's normal geography. One student also mentioned how ATM cards can be coded so an owner's cell-number is dialed automatically every time $N are withdrawn from an ATM - if the card owner hasn't withdrawn the money, the bank can be notified immediately. The SW capabilities to identify possible fraudulent use are extraordinary but the SW only works when the human performs their end of the deal - call your bank and cell carrier before you travel.