WASHINGTON - Regulators have seen the future of banking - and it extends far beyond anything envisioned in the new financial reform law.

"It is ironic that after all the years of struggle to get Gramm-Leach-Bliley, the more fundamental changes affecting financial services are going to be occurring outside of the new law," Julie L. Williams, chief counsel of the Office of the Comptroller of the Currency, said in an interview.

"The impact of technology will profoundly change what financial services are, and certainly how they are packaged and delivered."

Treasury Undersecretary for Domestic Finance Gary Gensler made a similar point in a recent speech. The Internet has significantly broadened the market for financial services, but as a result, he said, consumers no longer turn to their local banker for information about financial services because they can learn all the need to know online.

"While these developments represent enormous opportunities for financial services providers, they also bring very real challenges. New business models certainly will emerge," Mr. Gensler said.

As it has in the past, the Comptroller's Office seems ready to help banks innovate.

For instance, the agency has expanded traditional finder activities in which banks bring together a buyer and a seller for a fee. In several recent decisions the OCC has found that national banks' finder authority extends to negotiating discounts for third-party services that customers access through the bank's Web site, and even hosting an online "mall."

"The view of banking as being something that is evolving is very important," Ms. Williams said. "As banks begin to become more and more expert in a certain area, it becomes thought of as something that banks do."

In a recent speech Ms. Williams said television banking is "on the horizon" and predicted it will expand both access to bank services and customers' dependence on databases maintained by banks. "If this trend continues," she said, "customers may conclude that banks are a logical repository of all their information: financial and nonfinancial."

Banks "may come to serve a central role with respect to the processing, transfer, and storage of information generally," Ms. Williams said.

The possibility has not gone unnoticed by the private sector. Banking consultant Karen Shaw Petrou, president of Washington-based ISD/Shaw, advised one of her client banks to consider establishing itself as what she calls "an information fiduciary."

In Ms. Petrou's model, customers would provide the bank with all of their vital financial information and trust it to determine the products and services best suited to their needs. "Like any other fiduciary, it requires the bank to be a trusted decision-maker on behalf of the customer and the beneficiary," she said.

The upside for consumers is information security and convenience. For banks, it is reducing "disaggregation," the tendency of consumers to spread their financial services around to multiple providers as they search for the best rates and conditions. As a fiduciary, the bank would remain the gateway, if not the ultimate provider, for all of a customer's financial activity.

Ms. Williams said banks need to play a leading role in the development of digital signatures, which allow individuals to enter into contracts electronically.

The agency has already given permission to Zions Bank of Salt Lake City and Identrus Inc., a joint venture of several financial institutions, to operate as certification authorities for digital signatures.

But the expansion of existing activities, such as the verification of identity, is only part of what Ms. Williams forecast for the future of the banking business. She also sees good potential for nonfinancial activities such as document imaging and storage.

Document imaging and storage, which banks now use for check processing, is "clearly a function financial institutions can use in a way that is very directly related … to the banking business," Ms. Williams said. "But as they develop the expertise to do that, they are developing a very important new core competency."

As the business evolves, and banks are recognized as having both the capacity and the expertise in document imaging, Ms. Williams said, "You could have a situation where something migrates away from just being excess capacity to being something that is thought of as being part of or incidental to the business of banking."


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