Business & Technology A safety & soundness perspective

1. Business & TechnologyA safety & soundness perspective Information Meetings September / October 2004

2. Business & Technology • Technology is a tool • Business is the key • New communication channels • Use of Email • Use of Internet • Money Transmission - EFT, ATM, Bill Pay etc • Reporting – Call reports , Annual Returns etc

3. Credit Union IT Systems Provide: • Data and transaction processing • Reports and audits • Business planning • Data storage

4. Credit Union IT Systems • What about access to data and data protection? • What about operational procedures? • What about controls? • What about oversight? • What about responsibility and accountability?

5. Safety & Soundnessin Credit Unions • Responsibility to serve the membership properly • Must operate within the law • Protect the business from unnecessary risk • Protect and enhance reputations • Develop a sound business ethos

6. Safety & Soundnessin Credit Unions Essential to consider in terms of • Existing systems & operations • New services offering

7. Safety & Soundnessin Credit Unions Questionnaire & Results • Password Security - Users are not accountable • Users share passwords • Users cannot change their own passwords • Deletion of Data • Auditing of cancellations, amendments and deletions needs improvement • Electronic data recovery should always be possible • Electronic reporting • Users unable to extract reports electronically • Critical reports cannot be reproduced

8. Safety & Soundnessin Credit Unions Questionnaire & Results • Dormant and Deceased Accounts • Better management required, system controlling • Money Laundering • Report on values exceeding specified limits within a period • General • Low level of appreciation for system security in credit unions

9. Safety & Soundness in Credit Unions Risks • Poor or no clear accountability • System weaknesses or perceptions of weakness can lead to fraud or loss • Poor procedures and controls in credit unions can lead to fraud or loss

10. Safety & Soundness in Credit Unions Next Steps • Awareness, appreciation, buy-in • Set and improve standards • Improve data access security and auditing capability • Credit union procedures enforcement • Implement best practice in operations • Board and management oversight is necessary • Active supervision is essential • Manage the risks better

11. Safety & Soundness in Credit Unions Feedback & Discussion