We'll be back: OCC examiners are more effective on-site

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In his 1971 book "Silent Messages," Dr. Albert Mehrabian posited that a vast majority of a speaker’s credibility is conveyed through nonverbal cues rather than by spoken words.

That study helped generations of people understand the importance of nonverbal communication, particularly its ability to help people assess veracity, importance and motivation.

Now apply that concept in a complex discipline that requires individuals to identify risk and to assess personal motivation, which also requires the close analysis of thousands of datapoints arrayed across a variety of disciplines. That is the challenge of a bank examiner, whose work relies on open, honest and effective communication.

That communication and the relationship between examiner and banker work better in person. And because of that, bank supervision remains a high-touch business.

The coronavirus-related shutdowns over the last few months have forced examiners to conduct exams of financial institutions entirely remotely. Our examiners have learned to cope by using tools such as Zoom, GoToMeeting, Google Meets, Microsoft Teams and Skype. All of which are helpful but are ultimately imperfect substitutes for interacting in person.

One feature of on-site supervision that is lost when squeezed through an ethernet cable is the notion of access and immediacy.

As former vice chairman of a bank, I saw firsthand the value of on-site supervision. What I appreciated most was how accessible examiners were and being able to simply speak with them any time — in the hallway, cafeteria or conference room.

I also assure you that they took frequent opportunities to “pop in” on me and the management team when they felt necessary to do so to support their supervision. The possibility that an examiner might observe something in an unscheduled hallway interaction or might identify a concern based on an employee’s demeanor in a face-to-face meeting, increased confidence on both sides.

Amid the shutdown orders of the past three months, these kinds of casual collisions that historically helped uncover fraud and other issues have ground to a halt. Our examiners have worked hard to make do with scheduled video conferences and remote review of bank data, but this is not a long-term substitute for teams working on-site at bank facilities where they can observe bank operations and decision-making up close and personal.

Even within our personal lives, critical conversations achieve the best results when done face-to-face and not solely reliant on technological communications to exchange ideas.

Even in smaller banks where teams are in the bank only a few weeks each year, being on-site is useful. Examiners are trained over years to develop a sixth sense about detecting risk, fraud or evasion.

That works great when examiners have unfettered access to staff and records. In the rare instance when a banker puts up barriers to free access and openness, it's a red flag for examiners to look more closely.

These kinds of interactions cannot happen in a remote work environment, and history provides ample examples of fraud, such as those of Keystone Bank and others, that otherwise would have gone undetected except for the on-site work of examiners identifying red flags.

Admittedly, examiners had already been conducting more of their work remotely from the national banks and thrifts we supervise. Access to data and management information is more available digitally than ever before.

Technology tools help examiners scour large data sets to prioritize their work. By the time examiners reach the bank’s door, they have already accomplished a great deal of work.

All of that has made bank examination more efficient, reduced costs by eliminating unnecessary travel and reduced the disruptive aspects of bank examinations. Those efforts in advancing our supervisory processes will continue but need to be balanced with onsite examinations work.

But there are still irreducible elements of bank examination that require more than data analysis and file review. Examination is a human endeavor that relies on situational awareness and judgment, and that works best face to face.

There is nothing quite like looking each other in the eye or working shoulder-to-shoulder to solve a supervisory riddle or provide credible challenge to management decisions.

The Office of the Comptroller of the Currency is transitioning from maximum telework, in which more than 90% of our 3,600 employees work from home, toward more normal operations.

That includes more examiners visiting banks and working from our office locations around the country. We will proceed cautiously, add additional precautions and protocols as necessary, observe Centers for Disease Control and Prevention guidelines and consider other federal, state and local factors.

We will also follow bank protocols for accessing specific facilities where it does not impede our supervision. But we will start charting a course toward normalcy that once again includes in-person meetings with bank management and staff.

Our work supervising banks is a critical cog in our national economic engine. It ensures banks operate in a safe and sound manner, provide fair access and treat customers fairly.

I'm an evangelist for the use of technology and innovation to improve access and make work and lives easier. But our work is too important to rely solely on a phone, a webcam and a broadband connection.

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