Training bank employees and keeping them compliant with regulations is a big challenge. Just about every business is interested in improving organizational performance, and with the increased regulations coming down the pike, it is only going to get more difficult to achieve compliance. How do you ensure your policies and procedures are flexible enough?
We have been spending time lately talking informally to bank regulators to get their insights on the role bank policies and procedures play in “keeping the bank out of trouble” and how companies can get a handle on this before the next regulatory tsunami hits.
What we learned was that the regulators want to see proof that the bank has thought through all its corporate policies and set guidelines, directions, and exceptions that pertain to its unique situation. One of the biggest challenges is figuring out a system for dealing with all the complex exceptions and conditions involved in daily operations.
One of the regulators we spoke with drove the point home by sharing a story of a problem he experienced as a Compliance Officer in a multi-location bank. The audience served by one location was very different from the customers served at another location. This presented many challenges; handling customer identification was one. The bank had no formal, written guidelines. Everyone just did what they thought was best, which put the bank at risk and caused a lot of employee frustration and upset customers.
As this regulator put it: “Employees – especially those on the front line – have to know what to do in every weird situation. They need to know what to do when they are outside of the normal stuff.”
“Outside the normal stuff” can vary from bank to bank or even by location. A branch serving Population A may have different issues than a branch location that serves Population B with completely different demographics. So, when writing policies and procedures for your bank, you need a system that is flexible and designed with these exceptions built in.