December 1963 - Vol. 6 No. 12

The development of an on-line computer system for a savings bank institution is traced from the early conceptual needs of the bank to the consummation of design by The Teleregister Corporation. Both bank and equipment criteria are specified which led to the development of the Telefile System of The Teleregister Corporation.Operation of the on-line and off-line programs are described and statistics are cited for reliability and performance of the system. Benefits to the bank are discussed from the banker's point of view; an indication of future trends in the on-line savings bank field is also discussed.

The introduction of computers into the banking business has a wide variety of legal implications that merit careful attention at this very early stage. The industry is highly regulated by government and, hence, is subject to many statutes and regulations. It also is affected by important common law rules established by courts. The legal ramifications involve not only the mechanization itself, but also the very significant, economically attractive phenomenon of off premises processing. It is essential to identify and provide for many legal aspects right now, before systems and practices crystallize, in order to avoid the later impact of unanticipated physical complications and expense.The legal aspects of computerization in the banking business are especially diverse. In some states, there might be the basic question whether banks are authorized by law to invest in the new facilities, either directly or through cooperatives. More challenging are questions relating to off-premises processors, particularly with respect to the obligation not to disclose information concerning a bank's customers, the adequacy of fidelity bond coverage, the extent of liability for improper refusal to pay a check, and susceptibility to regulation by government agencies. Also pertinent is the propriety of data processing by banks for nonbank entities and particularly of the rendering of that service without charge for bank depositors.