SAN ANTONIO - As banks rely more on technology for services such as home banking, they will encounter new compliance challenges.

Rapid technological changes will require banks to be faster, better, and more convenient, risk managers gathered here this week were told.

Michael N. Hall, the director of finance-industry marketing for BellSouth Business Systems Inc. in Atlanta, said banks are at a disadvantage because they are more regulated than their competitors.

"People need banking, they don't need banks," Mr. Hall warned at the American Bankers Association's national security and risk management conference. "Your competitors don't have your regulatory burden."

Reinforcing that reality, Vincent A. Provenzano, senior bank examiner at the Federal Reserve Bank of New York, warned the audience that the central bank will be scrutinizing data bases and information systems.

Banks are supposed to be following guidelines put out by the banking agencies last year on data processing.

The farther banks have gone from mainframes, said Mr. Provenzano, the more mistakes they are making in computer systems.

More importance will be placed on how management is overseeing the systems, he said. "Just because it is a computer doesn't mean it is accurate all the time," Mr. Provenzano said.

Similarly, a bank is still liable if it hires an outsourcer to provide or manipulate data, he said.

The Fed itself needs some more education on high-tech issues, he said. The agency will soon be starting two new schools for examiners to keep up with changing issues in technology.

"We recognize the fact that we are always trying to play catch-up," Mr. Provenzano said.

Noncompliance, he warned, could mean lost assets as well as lost trade secrets. Mr. Provenzano reminded bankers that enforcement actions are made public and could contain proprietary business information.

Any time a new technology is introduced, banks should review their policies, advised Thomas J. Greco, associate general counsel at the ABA.

For example, banks should be aware that it is becoming easier for people to steal credit information through on-line networks, he said. Those people then have the data to pretend they are a bank customer.

That makes it difficult for banks to really know their customers, a policy most banks follow to prevent money laundering.

"This is an area where technology and the rules are not meshing very well," Mr. Greco said.

Another high-tech hazard, he said, is electronic mail. Lawyers are using E-mail as evidence of sexual harassment and discrimination in the workplace.

Banks could stave off this problem by having policies forbidding obscenities and discriminatory remarks in electronic mail, Mr. Greco said. Although some employees might complain that it is an invasion of privacy, he said, an official policy makes clear that E-mail is not private.

Some companies, he said, even flash a warning that electronic mail is being monitored every time a computer is turned on.

Bankers should also be aware that in most computer systems, "deleting" a file merely means that it is moved to another part of the network.

Banks should buy software that lets them write over files instead of deleting them, he said. "Attorneys love to go in and reconstruct files," Mr. Greco said.

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