Virtual Examination Program

In 2017, the NCUA Board approved the project and associated resources to research methods to conduct offsite as many aspects of the examination and supervision processes as possible. The virtual exam project team is researching ways to harness new and emerging data, advancements in analytical techniques, innovative technology, and improvements in supervisory approaches.

By identifying and adopting alternative methods to remotely analyze much of the financial and operational condition of a credit union, with equivalent or improved effectiveness relative to current examinations, it may be possible to significantly reduce the frequency and scope of onsite examinations. Onsite examination activities could potentially be limited to periodic data quality and governance reviews, interventions for material problems, and meetings or other examination activities that need to be handled in person.

The virtual exam should lead to greater use of standardized interaction protocols, advanced analytical capabilities, and subject matter experts. This should result in more consistent and accurate supervisory determinations, provide greater clarity and consistency with respect to how the agency conducts supervisory oversight, and reduce coordination challenges between agency and institution staff.

To be successful, it is likely NCUA’s examination staff will need to analyze more information about the credit union and communicate more frequently with management. However, it is not the agency’s intent to intervene in credit unions’ day-to-day operations or strategic planning.

By the end of 2020, the virtual examination team will deliver to the NCUA Board a report discussing alternative methods identified to remotely analyze aspects of the financial and operational condition of a credit union. The agency’s goal is to transform within the next five to ten years the examination and supervision program into a predominately virtual one for credit unions that are compatible with this approach. The transformation is expected to occur through incremental adoption of the corresponding new techniques and approaches.

Below is an estimated timeline for the project. Phases 3–6 are provisional tasks that are subject to change based on the NCUA Board’s review of the proposal.

Virtual Examination Timeline graphic represents the anticipated duration for the virtual exam program.  The timeline begins in 2017 with Phase 1 – Program Development.  This phase ended in December 2018.  Phase 2 – Research and Discovery started in mid-2018 and will last through the end of 2020.  At the end of 2020, the Virtual Exam Team will develop and present a proposal to the NCUA board for approval.  The remaining four phases are provisional and subject to change based on the NCUA’s board review of the proposal.  The provisional phases include Phase 3 – Decision Making, Phase 4 – Development and Design, Phase 5 – Testing, Monitor and Modify and Phase 6 – Incremental Adoption.  At this point, the timeline full deployment date is to be determined.

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