Thirty five percent of national banks still have no Internet presence, but they are invariably smaller banks that, in total, account for only 10 percent of all national bank customers. Even so, the number of national banks that are not online in some capacity is almost certain to drop, as bank customers increasingly come to expect on-line access to their financial information, regardless of the size of the institution they bank with. For example, most banks outsource the technical design, installation, and maintenance of their Internet systems, choosing not to do themselves what others can probably do better and cheaper. But the relationship between the bank and the technology vendor takes on a new sensitivity in the Internet environment. The more customers respond to marketing efforts and increase their reliance on bank web sites to conduct routine transactions remotely, the greater the bank s dependence on those who make those transactions possible.
Security is another issue with serious implications for Internet banking providers.
The risk of intrusions and security breaches has grown exponentially with the number of remote access devices and the availability of sophisticated tools that, in the wrong hands, can turn just about anyone with access to a PC into a dangerous hacker. Finally, Internet banking presents unprecedented cross-border and international challenges for bankers and bank supervisors. It s this aspect of the Internet banking phenomenon that I d like to focus on today. All financial institutions run risks associated with outsourcing and information security, whether or not they operate in the Internet environment. Since its establishment in 1974, the Committee s work can be understood in terms of two general goals.