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4 process tactics banks should employ today

Banks should embrace process improvements now in order to improve the bottom line and pave a smooth road to the future

Richard Paxton
Jun 2, 2016 · 3 min read

As the financial industry continues to evolve in the face of rapid technology advances and ever-changing compliance regulations, banks today are faced with the challenge of constantly retooling internal processes or risk falling behind more enlightened competitors. Rather than fear the dynamics of change, however, banks should lean into it and embrace process improvements and reengineering as ways to improve the bottom line. By taking a deep look into your bank’s programs and processes, you’ll likely find several opportunities where simple process changes can improve efficiencies across the board.

In fact, here are four areas of focus where you can easily start the process:

One of the most frequently asked question by regulators is how many high-risk customers do you have? If you are not able to answer that question, it’s time to make improvements.

Understanding who your high-risk customers are and tracking their business can be time consuming and have a ripple effect on other business lines, support units, legal entities and jurisdictions. In this instance, it’s time to embrace technology for assistance. Poor information management will lead to lack of timely reporting of suspicious transactions and potential fines.

Process improvement and reengineering can help solve some of these issues by developing comprehensive policies, procedures and enhanced management reporting of customer risk that encompass robust, ongoing monitoring and investigative processes.

What about current regulatory standards in anti-money laundering (AML)? Can you answer these questions about your program?

  • Is your bank’s KYC onboarding and risk assessment processes, system, procurement and implementation up to date? What about transaction monitoring and sanctions screening system?
  • Are there opportunities to enhance your bank’s quality assurance program?
  • Do you have an enterprise AML operational dashboard to monitor all aspects of the program in real time?
  • Do you have detailed documentation of all policies, procedures, and changes to the management process?

Conversely, perhaps there is a sufficient system in place but you are managing the expansion to new retail locations. Think you need to add head count to respond to the increased workload? Think again..

Financial institutions have zero flexibility when it comes to large currency transactions and currency transaction reports (CTRs). Because CTRs are one of the most informative tools the U.S. government uses to detect illegal activities, accuracy and timeline compliance are strictly enforced. Transactions need to be aggregated in order to detect attempts to elude these reporting requirements. Is your institution is stuck with paper intensive, inefficient and cumbersome processes that pose significant risk to the organization? If so and you’re faced with an increased need in reporting, the only solution might seem to be increased labor costs.

Compliance is one of those hot button topics that doesn’t seem to fade from news headlines. Recent enforcement indicates that compliance officers may face the greatest liability if/when compliance issues are taken to court. Pair this with an increased case volume and you’re probably considering increasing personnel to handle the extra caseload. Yet again, process reengineering can streamline your compliance operation.

Lean Kaizen process improvements, for example, are extremely effective if executed properly. Provided that there is a partnership in place between a bank’s compliance SMEs (subject matter experts) and those departments that generate over 90 percent of a bank’s incoming case volume, realizing comprehensive increases in compliance efficiencies is a realistic outcome.

The financial industry is not alone in facing change, but a significant difference is the number of changes in compliance regulations that seem to happen almost daily. By applying process improvements now, banks can be better prepared for meeting future requirements while still maintaining a customer-centric focus.

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