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New, Modified, or Expanded Bank Products and Services: Risk Management Principles

October 23, 2017 / Source: OCC

OCC BULLETIN 2017-43
Subject: New, Modified, or Expanded Bank Products and Services
Date: October 20, 2017

To: Chief Executive Officers, Directors, and Compliance Officers of All National Banks and Federal Savings Associations; Federal Branches and Agencies of Foreign Banks; Department and Division Heads, All Examining Personnel; and Other Interested Parties

Description: Risk Management Principles

Summary

This bulletin informs national banks, federal savings associations, and federal branches and agencies of foreign banks (collectively, banks) of the principles they should follow to prudently manage the risks associated with offering new, modified, or expanded products and services (collectively, new activities). New activities should be developed and implemented consistently with sound risk management practices and should align with banks’ overall business plans and strategies. New activities should encourage fair access to financial services and fair treatment of consumers and should be in compliance with applicable laws and regulations. This bulletin is consistent with the Office of the Comptroller of the Currency’s (OCC) support of responsible innovation by banks to meet the evolving needs of consumers, businesses, and communities.1

This bulletin rescinds and replaces the following:

  • OCC Bulletin 2004-20, “Risk Management of New, Expanded, or Modified Bank Products and Services: Risk Management Process,” issued on May 10, 2004.
  • Office of Thrift Supervision Examination Handbook section 760, “New Activities and Services.”

Note for Community Banks

This guidance applies to all OCC-supervised banks.

Highlights

The risk management principles outlined in this bulletin pertain to developing new activities.

  • New products and services may differ substantially from previous bank offerings and may result from relationships with third parties. New products and services include those offered for the first time, as well as offerings that the bank previously discontinued but will offer again after a substantial period of time has passed. New products and services can provide entrance into or solutions for new financial markets, add new convenience and capabilities for customers, or manage risks for customers.2
  • Modified products and services differ substantially from existing products and services in nature, terms, purpose, scale, or use. Modified products and services substantially alter the underlying risk qualities or characteristics of the existing products and services.
  • Expanded products and services are those offered beyond a bank’s current customer base, financial markets, venues, or delivery channels.

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