On August 9, 2024, the FDIC issued a Financial Institution Letter explaining the recent developments regarding Interactive Teller Machines (ITMs) and the FDIC’s approach to ITMs. The Letter relates to the FDI Act Section 18(d) requiring a state nonmember bank to obtain the FDIC’s consent before establishing a domestic branch.
According to the FDIC, ITM technology has become increasingly sophisticated in recent years. State nonmember banks have asked the FDIC whether using an ITM at a location other than an established branch would require filing a domestic branch application, or if it would be eligible for the Remote Service Unit (RSU) exclusion from the definition of a domestic branch, thereby not needing a branch application. The FDIC answered that it would not consider an ITM established by a state nonmember bank to be a “domestic branch” subject to FDIC approval under section 18(d) of the FDI Act under the following circumstances:
The ITM is an automated, unstaffed banking facility owned or operated by, or operated exclusively for, the bank, which is equipped to enable existing customers to initiate an interactive session with remotely located bank personnel; and
To the extent that bank personnel have the ability to remotely assist the customer with the operation of the ITM to perform core banking functions, customers must also be able to perform such transactions without the involvement of bank personnel and must have the sole discretion to initiate and terminate interactive sessions with bank personnel.
Additionally, the FDIC advised that state nonmember banks setting up ITMs within these parameters don’t need to file a branch application. However, if they want to use an ITM with additional features at a location that isn’t an approved branch, they might need to file a branch application.
Read the FDIC’s full FIL here.