Late to the game, but my small bank is considering offering online banking to existing customers. I am looking for guidelines in "screening" current customer for this product. Any suggestions?

Screening for what?

to let a customer use online banking.

You might want to provide a little more information. At our bank, consumers can sign up for online banking at the time they open their account. They have the ability to pay bills and transfer funds between their accounts. Consumer online banking is different from the cash management (online banking)products offered to business customers. If you will be offering the ability to originate wires and ACH entries to your business customers, you will need a solid agreement and will probably want to consult with an attorney. Along with a good agreement, you will need to establish procedures that spell out how business customers will be approved.

Personally I would recommend starting out in small steps. For example, allowing customers to make account transfers, see their statements, see their checks. I would certainly hold off on offfering customers the possibility of issuing ACH or wires via online. These days, this is where much of the online fraud is happening. See BOL Tech pages for lots of scary stories. there are many steps to follow before entering this world. You certainly need to look at guidance that came out a few years back and the whole multi factor business. Enjoy! You now have job security!

We let all of our consumers sign up for online banking but have a screening process in place for customers signing up for bill pay. Trees has a good suggestion, there are so many different service options offered through online banking and cash management that it's probably best to roll out in pieces. In my experience, anytime you roll out something new there are problems that arrise that were never considered or things don't work the way they were supposed to. Rolling it out in phases will give you time to fix problems from the last phase before you roll out the next phase.

Oh, and be sure you really research the vendor you are going to use to make sure they have the products that you want to offer and ask them about what type of products they hope to see in the future. Make sure the vendor and you are moving in the same direction. I've been through a conversion where we switched from one online banking vendor to another and it was a nightmare and it opened us up to a lot of risk. We lost a lot of accounts, customers were seeing accounts that didn't belong to them. The phones were ringing off the hook for a month or two. We had to extend our hours. I would consider quitting my job if I ever had to go through that again.

From a regulatory standpoint, if you will be allowing them to open the account online, you will want to go through the same process you use for opening any account in person at the bank using your KYC policies CIP including OFAC checking. Many banks only allow current customers to open Online Banking online. Check out the FFIEC Handbooks - Electronic Banking and Information Security. The above suggestion on vendors is also very accurate, make sure you do thorough due diligence on the vendor and the product. A couple of other key issues to think about - how are your going to provide disclosures, what are the user ID and password requirements (do they select their own or are they assigned by you), how are the log on credentials given to the customer, are you allowing any form of SSN as an ID or password, etc. I caution you on using any form of the SSN, even as an initial logon that must be changed. Try to implement something different. Also make sure you have a security awareness page with info on latest fraud techniques, on requiring up to date firewalls, anti-virus, anti-spyware and malware tools. Just a few thoughts!