Classification of Interactive Teller Machines as Domestic Branches or Remote Service Units

Summary:

Statutory Background

Section 18(d) of the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. § 1828(d)) requires a state nonmember bank to obtain the FDIC's consent before establishing a domestic branch. Section 3(o) of the FDI Act (12 U.S.C. § 1813(o)) specifically excludes automated teller machines (ATMs) and remote service units (RSUs) from the definition of domestic branch.

Recent Developments Regarding Interactive Teller Machines

Interactive Teller Machine (ITM) technology has become increasingly sophisticated in recent years. State nonmember banks have sought guidance from the FDIC regarding whether the proposed use of an ITM at a location other than an established branch facility would require the filing of a domestic branch application, or would qualify for the RSU exclusion to the definition of domestic branch (meaning no branch application would be necessary). ITMs generally resemble automated teller machines but allow customers to interact with live tellers to complete a variety of banking transactions.

Statement of Applicability: The contents of, and material referenced in, this FIL apply to all FDIC-supervised state nonmember banks.

Highlights:

• The FDIC 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 customersto 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.
  • ITMs that operate outside of these parameters may require a branch application.