[Federal Register Volume 90, Number 90 (Monday, May 12, 2025)]
[Notices]
[Pages 20212-20214]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-08280]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
[Docket ID OCC-2025-0008]
Request for Information Regarding Community Bank Digitalization
AGENCY: Office of the Comptroller of the Currency (OCC), Treasury.
ACTION: Request for information and comment.
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SUMMARY: To build on its understanding, OCC is issuing a request for
information (RFI) on community bank engagement with digitalization. The
RFI solicits comment on the key challenges and barriers faced by
community banks in the adoption and implementation of digital banking
solutions.
DATES: Comments must be received by June 26, 2025.
ADDRESSES: Commenters are encouraged to submit comments through the
Federal eRulemaking Portal. Please use the title ``Request for
Information Regarding Community Bank Digitalization'' to facilitate the
organization and distribution of the comments. You may submit comments
by any of the following methods:
Federal eRulemaking Portal--Regulations.gov: Go to https://regulations.gov/. Enter ``Docket ID OCC-2025-0008'' in the Search Box
and click ``Search.'' Public comments can be submitted via the
``Comment'' box below the displayed document information or by clicking
on the document title and then clicking the
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``Comment'' box on the top-left side of the screen. For help with
submitting effective comments, please click on ``Commenter's
Checklist.'' For assistance with the Regulations.gov site, please call
1-866-498-2945 (toll free) Monday-Friday, 9 a.m.-5 p.m. Eastern time,
or email [email protected].
Mail: Chief Counsel's Office, Attention: Comment
Processing, Office of the Comptroller of the Currency, 400 7th Street
SW, Suite 3E-218, Washington, DC 20219.
Hand Delivery/Courier: 400 7th Street SW, Suite 3E-218,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2025-0008'' in your comment. In general, the OCC will
enter all comments received into the docket and publish the comments on
the Regulations.gov website without change, including any business or
personal information provided such as name and address information,
email addresses, or phone numbers. Comments received, including
attachments and other supporting materials, are part of the public
record and subject to public disclosure. Do not include any information
in your comment or supporting materials that you consider confidential
or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this action by the following method:
Viewing Comments Electronically--Regulations.gov: Go to
https://regulations.gov/. Enter ``Docket ID OCC-2025-0008'' in the
Search Box and click ``Search.'' Click on the ``Dockets'' tab and then
the document's title. After clicking the document's title, click the
``Browse All Comments'' tab. Comments can be viewed and filtered by
clicking on the ``Sort By'' drop-down on the right side of the screen
or the ``Refine Comments Results'' options on the left side of the
screen. Supporting materials can be viewed by clicking on the ``Browse
Documents'' tab. Click on the ``Sort By'' drop-down on the right side
of the screen or the ``Refine Results'' options on the left side of the
screen checking the ``Supporting & Related Material'' checkbox. For
assistance with the Regulations.gov site, please call 1-866-498-2945
(toll free) Monday-Friday, 9 a.m.-5 p.m. ET, or email
[email protected].
The docket may be viewed after the close of the comment period in
the same manner as during the comment period.
FOR FURTHER INFORMATION CONTACT: Gareth Henley, Financial Technology
Policy Specialist, Bank Supervision Policy, (202) 649-5200. If you are
deaf, hard of hearing, or have a speech disability, please dial 7-1-1
to access telecommunications relay services.
SUPPLEMENTARY INFORMATION:
I. Introduction
The OCC seeks public comment on community banks' engagement with
digitalization.\1\ This RFI will supplement the OCC's understanding of
these activities and support the OCC in its supervisory activities.
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\1\ The term ``banks'' as used in this RFI means national banks
and Federal savings associations.
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II. Community Bank Digitalization
The OCC supports the strengthening and modernization of community
banks and aims to facilitate community banks' safe, sound, and fair
transition to digital banking, including with regard to arrangements
with technology providers and supporting a level playing field. In
support of community banks' transition to digital solutions, the OCC
recently published a non-exhaustive list of relevant OCC rules,
statements, and guidance \2\ that community banks can reference.
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\2\ See Digitalization: Resources for Community Banks, OCC
Bulletin 2025-3, (March 19, 2025).
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For purposes of this RFI, digitalization is the use of technology
to change a business model, provide new revenue and value-producing
opportunities, or automate business processes. New and emerging
technologies can be important tools for community banks to meet
customer demand, increase revenue, improve efficiencies, and remain
competitive. For example, digitalization can improve operational
functions (e.g., data analytics, transaction monitoring, process
improvements, reporting, etc.), support the addition of new or expanded
business lines, and allow banks to communicate more seamlessly with
customers. In this way, digitalization has the potential to be a key
component of community banking and institutions' ability to meet the
future needs of the communities and customers they serve. When engaging
in digitalization strategies and initiatives, the OCC examines banks
for safety and soundness and compliance with applicable laws and
regulations, including consumer protection laws. Banks are expected to
implement risk management systems appropriate to the size of the
institution and the nature, scope, and risk of its activities to
identify, measure, monitor, and control risks for the strategies
undertaken.
The OCC seeks input from community banks and relevant stakeholders
regarding the key challenges and barriers faced in adopting and
implementing digitalization strategies and initiatives. The purpose of
this RFI is to better understand the specific obstacles that community
banks encounter in their efforts to modernize operations, enhance
customer experience, and remain competitive in an increasingly digital
financial services environment. This request is separate from the ``RFI
on Bank-Fintech Arrangements Involving Banking Products and Services
Distributed to Consumers and Businesses,'' \3\ jointly issued by the
OCC, Federal Reserve, and Federal Deposit Insurance Corporation in July
2024. The agencies continue to review and consider the feedback
received on that document.
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\3\ 89 FR 61577 (July 31, 2024).
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We invite community banks, industry groups, technology providers,
and other interested parties to respond to the following questions:
1. Planning for Digitalization: What are the primary challenges
facing community banks in pursuing digitalization strategies or
initiatives? To what extent is digitalization a strategic priority for
community banks, and what factors influence this prioritization? How
are community banks addressing the need to obtain subject matter
expertise to make informed risk-based decisions about digitalization
strategies, initiatives, or their implementation? What challenges, if
any, are community banks facing in hiring or retaining qualified
personnel (e.g., information technology, cybersecurity, compliance,
audit, and other assurance roles) to support digitalization strategies
or initiatives?
2. Board and Governance: How are community banks' boards of
directors engaged in overseeing and supporting digitalization
strategies and initiatives? What challenges do community banks' boards
of directors face when seeking education or considering opportunities
regarding digitalization? How do community banks' boards balance the
pursuit of a digitalization strategy with their overall risk appetite
and the bank's long-term mission? Describe the governance processes or
policies in place to ensure that community banks' digitalization
strategies or initiatives align with their overall business strategy
and regulatory obligations to operate in a safe and sound manner and in
compliance with applicable laws and regulations.
3. Due Diligence and Implementation: What factors are affecting
community
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banks' due diligence and pre-implementation research of digital
solutions? What are the most common obstacles facing community bank
digitalization during the due diligence and pre-implementation phase,
and how are community banks overcoming them? What are the most common
obstacles facing community bank digitalization during the
implementation phase, and how are community banks overcoming them?
4. Digitalization Costs and Budget: A digitalization strategy can
involve significant up-front and ongoing costs and resources. What
types of up-front costs, ongoing costs, and resources are associated
with undertaking a digitalization strategy? How are potential budget
constraints impacting community banks' ability to adopt or maintain
digitalization strategies?
5. Use of Third Parties: To what extent are community banks reliant
on third parties (e.g., core service providers, technology vendors,
financial technology firms (fintechs), regulatory compliance solutions,
etc.) for the implementation of digitalization strategies or
initiatives? How is this reliance managed? Are there any impediments to
community banks' digitalization strategies with respect to core service
providers or other third parties? Are community banks able to address
these impediments, and if so, how do they enhance their control
environments to best manage third-party relationships in light of these
impediments? Are community banks finding third-party solutions meet
their specific digitalization needs? If not, where are community banks
facing the biggest gaps? What is the range of practice for community
banks working with a single third-party provider for an integrated
approach to digitalization versus engaging multiple third-party
providers to address specific needs? What are the benefits and
challenges of each approach? How are banks managing the risk that a
third party may introduce a new technology (e.g., artificial
intelligence (AI)) or process without the bank's prior knowledge,
potentially increasing risk outside of the bank's risk appetite?
6. Competition and Market Trends: How do community banks see
digitalization affecting their competitiveness with fintechs, larger
banks, and similarly situated community banks? Describe any risks
associated with the lack of digitalization strategies or initiatives.
How do trends and customers' demands for digitalization impact
community banks' digitalization strategies and initiatives? How do
community banks gather feedback on customer demands and changing
technology needs?
7. Use of Artificial Intelligence and Machine Learning: How are
community banks incorporating AI and machine learning (ML) into their
digitalization strategies and initiatives? How has this use evolved as
new forms of AI become commercially available, such as generative AI?
Are banks using AI primarily for cost savings and efficiency, revenue-
generating activities, or other reasons? How are banks evolving their
risk management to address the use of AI and ML, including when
introduced through a third-party relationship? How can regulators
support community banks' adoption of AI and ML?
8. Effect of Applicable Laws and Regulations: How do regulatory and
compliance requirements impact the decision to undertake digitalization
strategies or initiatives? What regulatory, compliance, or supervisory
requirements present the greatest challenges to digitalization at
community banks? How are banks using digitalization strategies and
initiatives to increase the effectiveness or efficiency of compliance
programs? How can regulators support community bank adaptation and
competitiveness amid continued digitalization and technological
evolution?
9. Associated Risks: How do community banks manage the ongoing
risks of digitalization that may result in material financial risks?
How do community banks and third-party providers, including fintechs,
approach cybersecurity and data privacy concerns when considering the
implementation of new technology at a community bank? How are community
banks safeguarding against the evolving nature of threats arising from
bad actors' use of new technology? How can regulators support community
banks' adoption of new technologies and the management of associated
risks?
10. Data Sharing: To what extent do community banks share data with
third-party providers, including fintechs, as part of a digitalization
strategy or initiative? What challenges or concerns are encountered in
facilitating secure and compliant data sharing? How are community banks
managing connectivity (e.g., by using an application programming
interface (API), secure file transfer protocol (SFTP), or some other
method) for the secure sharing of data with third-party providers? Are
there any limitations or constraints within community banks' API
offerings, such as restrictions on functionality, data accessibility,
scalability, or third-party compatibility? If so, what measures,
frameworks, or technologies are community banks using to ensure
seamless data exchange, interoperability, and secure communication
across different platforms, core banking systems, and external
fintechs?
Stuart Feldstein,
Acting Principal Deputy Chief Counsel, Office of the Comptroller of the
Currency.
[FR Doc. 2025-08280 Filed 5-9-25; 8:45 am]
BILLING CODE 4810-33-P