ALEXANDRIA, Va. - NCUA has taken its lumps in the past for not being tech savvy enough to deal with emerging technological issues credit unions are facing, but today's NCUA seems to be turning things around in the tech arena. The regulator recently sent a letter to credit unions actually encouraging credit unions to consider the "benefits of offering Internet-based electronic financial services" to its membership. It doesn't sound like a regulator worried about its ability to ensure credit unions' online operations are in line with safety and soundness. "Credit unions have done an incredible job of taking their services online and are finding a very positive and productive reception from the membership. That's why this letter begins by encouraging credit unions to consider offering Internet-based services. It's something the marketplace is beginning to demand," said Acting NCUA Chairman Dennis Dollar. "Credit unions need to evaluate these services in their strategic plans." To begin evaluating these services, credit unions will likely start with a cost-benefit analysis, said Dollar. NCUA hopes to help in that area with a new self-assessment guide it is developing. The guide is designed to assist CUs in managing the risks associated with Net-based services. Dollar said the guide should be out sometime this fall. NCUA, said Dollar, is obviously not the foremost expert on these tech areas, so it is utilizing outside partners for tech expertise. It has contracted with Deloitte & Touche to develop the self-assessment guide. "We're not claiming that NCUA is an expert on emerging technology and giving some regulatory prescribed methods for credit unions to follow. We're trying to be a source of information, providing best practices, if you will, for credit unions to help them at least examine these issues," said Dollar. In another tech move, NCUA has added an IT section to its Web site. It contains resource information on tech-related issues. Also, security firm Digital Defense has been contracted by NCUA to provide examiner training on security issues relating to online operations. The letter to credit unions also stated that many credit unions are reliant on vendors and CUSOs for tech expertise and resources. NCUA Board member Yolanda Wheat is pushing to get some level of examination oversight over vendors. NCUA was temporarily given vendor examination authority for Y2K.
Dollar said while NCUA is using outside help like Deloitte & Touche and others, it is also trying to bolster its IT knowledge in-house. "We're not alone in that other agencies are likewise lacking in this area. It is very difficult for a government agency to be on the cutting edge of technology like a private firm can be. What were seeking to do is improve our own training. We want to develop technology specialists within our examiner core," said Dollar. That doesn't mean that all NCUA examiners will be tech specialists, but Dollar hopes to have at least one in each examiner group. As of June of last year, NCUA reports that 1,353 CUs were offering Net-based transactional services, a 38.49% increase from year-end 1999. -pgentile@cutimes.com
