Interagency Statement on Retail On-Line PC Banking - FFIEC

GuidanceFederal Financial Institutions Examination Council (FFIEC)Risk Management

This statement alerts the Board of Directors and management to some of the risks and concernsof retail on-line, personal computer banking (PC banking). Recently, the staff of the FFIECagencies organized a symposium to hear industry experts offer their thoughts and observations onthe development of retail on-line PC banking. Through this statement, the FFIEC agencies wishto impart many of the ideas discussed during the symposium to bankers and examiners.

II.EXECUTIVE SUMMARY

Financial institutions are beginning to utilize new technologies to offer innovative products andservices to their customers. On-line PC banking exemplifies an emerging delivery channel forretail banking services made possible by technology. One of the reasons for the rapid evolution ofPC banking involves the increased use of the Internet1. Regulatory agencies recognize that PCbanking offers opportunities for financial institutions to enhance customer relationships andimprove competitive positions.

Before implementing a PC banking program, management should exercise sufficient due diligenceand develop comprehensive plans. Such due diligence would ordinarily include the followingactivities.

• Review the implications of PC banking on the institution's strategic plan;
• Evaluate customer expectations and demands;
• Determine resource requirements;
• Assess the risks and required controls, particularly those related to system security;
• Evaluate internal and/or external expertise needed to support the PC banking system;
• Develop effective policies and procedures covering the program;

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