Financial institutions are in a tough spot. In addition to a tough economic environment, the subprime mortgage crisis and resulting credit crunch are leading to increased regulatory scrutiny and enforcement in the banking industry. As new regulations continue to bring stricter government oversight, banks must spend more time, money and resources ensuring they are following compliance guidelines.
All of these outside pressures are forcing banks to re-evaluate their business processes to pinpoint the areas of opportunity that will keep them operating competitively in an ever-changing market. However, banks are being stretched as they struggle to stay up-to-date on compliance issues while trying to grow their businesses, increase product and service offerings and improve customer service.
How can banks manage it all? Looking outside for compliance help is one option. If the bank performs its due diligence and can partner with a risk management provider that will help it meet all of its compliance needs, the bank eliminates many inefficiencies. And if that provider has a single solution to help the bank proactively address all of its major compliance concerns, it can eradicate almost all of them.
A Single Approach to Navigating the Compliance Maze
One of the biggest issues many banks have related to regulatory compliance is that they use disparate processes and technologies to manage their various business lines. Because the systems and areas of the bank are often isolated from one another, they require substantial amounts of time and in-house resources to install and continually update each system in accordance with the changing regulatory environment. For instance, every time a new regulation is passed or an existing one is revised, the bank must make multiple compliance content updates to its numerous systems. Doing so gives the bank more opportunities to miss a required change and fall out of compliance. Making the multiple updates also slows the bank down, reducing the amount of time it can spend doing business.
But using a single technology platform to handle all of its compliance needs allows a bank to open new accounts and complete transactions more quickly through the solution’s common database structure. The single solution offers fewer business interruptions because there is only one installation and one update when regulatory changes occur and new versions are released. A bank’s staff also benefits because they only need to learn one user interface and can become proficient on the system in a short amount of time.
Using a single solution can also help the bank improve and automate some compliance processes. For example, when complying with the Home Mortgage Disclosure Act (HMDA), a single solution could allow the bank to perform essential real-time HMDA compliance checks such as geocoding, FFEIC edit checks and rate spread calculations. But a single compliance technology solution alone won’t solve all a bank’s compliance headaches. An effective compliance solution must be built upon strong compliance expertise. A competent provider, that is not only knowledgeable about but also closely monitors on an ongoing basis existing and potential state and federal regulatory requirements, can provide objective suggestions for the bank to create and implement effective and efficient compliance processes that utilize technology. This makes life easier for a bank’s employees and allows them to spend more time working with customers to help fulfill their needs.
One Important Way to Improve the Customer Experience
The Forrester Research survey mentioned earlier emphasizes the importance of competent customer service, especially when working with younger customers who are the future of a bank’s business. So it will be important to discover new ways to better serve them. By working with a single compliance technology system, a bank can spend more time doing so instead of figuring out how to navigate multiple systems.
The system itself can help a bank begin providing better service. A single, unified system allows a bank to have access to customer data across their lines of business once that data is entered into the solution. For example, if a customer wants to open a deposit account and a mortgage application on the same day, a single bank employee can easily help them do both with the same system and without sending them from one area of the bank to another. With one system, the bank employee also can access customer data for both accounts without repeating the information gathering process. The benefit to customers is obviously a better experience, but the upside for banks is that employees are able to identify additional business opportunities for cross-selling by spending more time with customers.
A comprehensive, yet flexible risk management solution that offers banks their choice of in-demand functionalities such as dynamic compliance documents as well as electronic signatures and electronic delivery capabilities can also enhance the customer experience. Dynamic documents give a bank the ability to quickly build simple or highly-complex document packages according to a customer’s specific transaction type. Securely delivering those document packages electronically to customers and allowing them to offer their approval with an electronic signature gives them the convenience and speed today’s banking customer is looking for. It also means that the bank can lock the customer into the particular product much faster and spend additional time understanding their other financial services needs.
In today’s banking industry, less is becoming more. As banks are faced with the choice of managing their businesses for growth versus managing multiple vendors and increasing regulatory obligations – partnering with one provider to implement a single solution might be the most efficient and effective way to put the focus back where it belongs – on customers.
