E-Retail: electronic markets and fraud.

PositionKnowledge-Based Economy: WHAT IS IT AND WHAT IT MEANS FOR ALASKA

Thomas R. Case; The Executive Forum will address electronic trade opportunities and its dark side, the potential for fraud. This is the third in our series of discussions about the knowledge-based economy. We now focus on the gap between conceptual framing of the issue and execution into action.

Vern C. McCorkle: Alaska Business Monthly sees the UAA College Of Business & Public Policy/Alaska Business Monthly Executive Forums as a conscientious effort on the part of the college to reach out to the business community to find out what it wants or needs, and to identify opportunities for applying theoretical knowledge to practical business problems. We are very fortunate to have the CBPP share the expertise of its faculty with the business community.

As I listened to our distinguished guest and Nobel Laureate, Dr. Vernon Smith, at a recent public lecture, I came to an enlightened understanding that the "knowledge economy" means not just having knowledge but knowing how to use it to produce goods or services with economic value.

Victor Mollozzi: We started Northrim Bank in 1991 with "Dialing for Dollars" and $7.5 million, which has grown to $820 million today. We started with some electronics, but we sent statements out manually, with people receiving their own cancelled checks back. Now, the entire banking industry is moving to the paperless electronic transfer of funds. People do not write checks very often; you can set up accounts without paper transactions. An automated check-handling system replaces the old system for speed of transaction. Even auditing is now done on an electronic base, which has drastically reduced costs.

We look at security issues as a central concern for banking. Records need to be encrypted, and the security of the information must be maintained. National security issues such as illegal money laundering, or other sorts of fraud or terrorism, require diligence. We have huge volumes of transactions even in Alaska, so computer software is used to monitor and detect fraudulent transactions. The consumer shares the burden to be sure we are properly reflecting their transactions. Consumers must encrypt communications to the bank for sensitive information like financial statements, checking account access data and accounts. Consumers must protect ATM numbers and passwords. Unlike the old paper-based banking system, the consumers have a larger role to play in keeping their own information secure and their banking transactions private.

Scott Thorson...

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