1. Business & Technology A 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 & Soundness in 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 & Soundness in Credit Unions Essential to consider in terms of  Existing systems & operations  New services offering

7. Safety & Soundness in 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 & Soundness in 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 Improve data access security and auditing capability Credit union procedures enforcement Credit union procedures enforcement Implement best practice in operations Implement best practice in operations Board and management oversight is necessary Board and management oversight is necessary Active supervision is essential Active supervision is essential  Manage the risks better

11. Safety & Soundness in Credit Unions Feedback & Discussion