Seeking to level the high- tech playing field for thrifts and banks, the Office of Thrift Supervision is reexamining its existing regulations regarding savings institutions' use of emerging technologies in hopes of reforming the system.

Technology is such uncertain ground for the OTS that it's taken the admittedly unusual step of asking for industry input even before the agency puts out proposed new regulations for comment. "We seek (industry) counsel," says OTS Director Nicolas Retsinas. "We don't have all the answers. In this case, technology is outpacing current rules."

The result: Thrifts are potentially at a disadvantage because their larger bank rivals can forge ahead and employ technological innovation without fear of recrimination. "The business of banking is the business of processing information," says Retsinas. There is an inevitability to the use of technology-there is no choice. The marketplace will dictate that there will be increasing use of technology, not just by the (thrifts) but also by the customers."

The OTS is reacting to thrifts that weren't certain how or when to introduce new technologies due to a murky regulatory picture. "Some of them have questions and are reluctant to change their processes, because they're not sure that we, as regulators, would enable them to do so. There needs to be clarity. They would benefit from a clear statement."

A straightforward OTS position on new technologies-from smart cards to on-line services-is a necessity, says Retsinas. Once these institutions understand what they're allowed and disallowed, as well as any gray areas in between, they can freely implement new technologies on the same footing as their bank competitors. "Large institutions have an interest because of the very competitive environment that they're in, and they need to do their business more effectively," he says. "But small thrifts are equally challenged because technology is necessary for them to remain competitive." FB

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