Under a new computerized program, Federal Reserve examiners could be spending 30% less time in banks.
The Fed will unveil its automated loan analysis system, called Examiner Workstation, at the Independent Bankers Association of America convention in Las Vegas next week.
The program will allow examiners to download data directly from a bank's data base and analyze the loan portfolio outside the bank.
"This is designed to improve the quality of exams, reduce the amount of time spent on-site, and utilize new technologies," said Richard Spillenkothen, the Fed's director of banking supervision and regulation.
"This will sharpen the examiners' focus and allow them to spend more time analyzing how the loan portfolio could impact the condition of the bank."
While its initial focus is on lending, the Examiner Workstation will be expanded to aid supervisors in other areas, such as investment portfolios, community reinvestment, and holding company operations, according to Larry Cuy, a Federal Reserve Bank of Cleveland vice president who headed development of the Examiner Workstation.
The program will be installed on examiners' personal computers. Graphically, the screens of the program are set up like a paper-filing system. When information on a specific loan is displayed, an examiner can click the mouse to "pull" files containing information on the loan's collateral, guarantors, and history, among other things.
"We've tried to make this as intuitive as possible for examiners," Mr. Cuy said.
The program allows supervisors to easily organize loans into different categories, such as those that are past due, he explained. Examiners also will be able to quickly discern whether the bank has any risky credit concentrations.
"This will allow examiners to cut and slice information in different ways to look at concentrations," Mr. Spillenkothen said. "It will give us a better sense of the risks."
North Carolina Banking Commissioner Hal Lingerfelt said that the new program will take a load off the shoulders of both bankers and examiners.
"This is the beginning of a new era of bank examination," said Mr. Lingerfelt, who is also chairman of the Conference of State Bank Supervisors' technology council. "Examiners will be able to do more work before going into the bank, and more after. It's truly going to reduce regulatory burden across the board."
The program was sparked by a series of banker surveys the Fed did over the past few years, Mr. Cuy said.
"They thought there was considerable potential to make more use of technology in exams," Mr. Cuy said. "Bankers are making a lot of use of technology, so why shouldn't we?"
Examiner Workstation will be demonstrated publicly for the first time at the IBAA convention during an afternoon seminar on March 5. However, the program is already being tested by examiners at a number of state banks supervised by the Fed. All 12 of the Fed's reserve banks will be using the system by mid-April, Mr. Cuy said.