Good e-news from Wachovia and advice for Congress

Last week, I got a message from Wachovia (soon to be Wells Fargo) that they’ve added the ability to download securities account statements automatically in Quicken and Money.  Banking and credit card customers have been able to do this with Wachovia for years, but Wachovia's securities side has lagged behind. 

This made me think about how much banking has changed in recent years.  For Wachovia and the rest of the financial sector, the last decade has involved a huge shift as customers have demanded more online access and the federal government has pushed policies that encourage "e-banking." 

Yet, discussion about the banking crisis has included almost no mention of changes brought about by the electronic-based banking model.  Although the upfront costs for online services is high for the banks, they should be seeing consider able benefits now, as customers shift away from paper and away from transactions that require human interactions.

They also should have access to more information than ever before: about one another, about their customers, about their holdings, and about the entire sector.  Plus, with electronic communications, they have unprecedented options for conveying messages to customers, the markets, regulators, and the rest of the industry.  Despite this, they're failing for many of the same reasons banks failed 70 years ago: Overextending credit to risky borrowers, inability to meet reserve calls, dwindling confidence in equities markets, and so on. 

Before Congress starts pulling apart and re-regulating the banking industry, I hope they'll look at this:  Why hasn't the banking industry been able to use the information it receives through electronic innovations more effectively?  What role can electronic commerce play in ensuring better transparency throughout the sector?  In a world where any amateur can Google someone for an hour and get at least a *sense* of whether they're nominally creditworthy, the banks should not be in the position they are today.

Similarly, Congress should take a look at how technology can drive operational improvements across the auto industry before even considering a bailout there.  We're hearing a lot about encouraging Detroit to make more energy efficient cars, but they could save a helluva lot of a resources just by reducing the paperwork involved in shipping, selling, and/or buying a car. 

Rather than propping up 19th-century commerce models to keep these sectors limping along, use this crisis as an opportunity to turn them into the 21st-century successes they could be.