Automating Policy Management is the Most Cost-Effective Way to Improve Compliance
The disruptive factors of the past year and a half - high inflation, interest rate volatility, bank closures, lingering effects of the pandemic, and the crash of the crypto markets – have all influenced the perspectives of the Consumer Financial Protection Bureau (CFPB) and other regulators. In addition, onsite examinations are returning to their pre-pandemic levels following the respite that occurred in 2020 and 2021.
One of the most important areas of meeting compliance is in creating, updating, communicating, and tracking organizational policies and procedures. This is often a manual process, costing compliance professionals hundreds of hours of their time to manage.
Keeping an organization compliant with all relevant policies and procedures is too critical a responsibility to rely on manual processes. Policies establish and communicate compliance responsibilities to employees, address legal requirements, and ensure compliance obligations are incorporated into the organization’s business processes. Banks should consider policy management software, which can be a valuable tool for organizations that want to stay up to date with changing regulations, reduce the risk of compliance breaches, improve efficiency, increase transparency, and reduce costs.
Policies Are a Critical Part of Regulatory Examinations
Regulators consistently say maintaining and communicating leadership-approved policies and procedures is a key part of any compliance management system (CMS). According to the Consumer Financial Protection Bureau (CFPB) Examination Procedures:
“Examiners should seek to determine whether compliance policies and procedures:
• Are consistent with board-approved compliance policies.
• Are maintained and modified to remain current and complete, and to serve as a reference for employees in their day-to-day activities.”
Ad Hoc Policy Management Methods Are Not Working
Unfortunately, financial services organizations often don’t meet regulators’ policy expectations. The Federal Deposit Insurance Corporation (FDIC) has said that policies are historically the leading category of “Matters Requiring Board Attention.”
This is not surprising, given how policies are often managed. At many financial services organizations, policy management is largely a disjointed process, using email, word processing, spreadsheets, and a company intranet to manage large-scale compliance updates. This results in wasted hours on tasks that technology can assist with or fully automate, including:
• Researching regulatory changes,
• Identifying impacted policies,
• Coordinating efforts to create and update policies,
• Identifying appropriate policy language,
• Documenting change decisions for regulators,
• Communicating policy changes to all impacted employees,
• Tracking employee acknowledgments, and
• Establishing a policy and procedure repository for employees
A Better Way
Policy management software specifically designed for the financial services industry is a game changer for compliance professionals. When selecting a new policy management software, it’s important to find an end-to-end solution built specifically for financial services organizations.
When looking for a policy management solution, bank leaders should compare the features and benefits the software offers in the following categories.
Industry-Specific Regulatory Resources
Policy management software should help financial services leaders make informed decisions with greater clarity and confidence.
Specifically, the solution should include:
• Regulatory alerts
• Policy considerations for regulatory updates
• Policy templates
• Regulation overviews
Easy Setup and Administration
Implementing new software should be a quick and easy process. Features like bulk imports of existing users and documents will ensure all the data gets transferred quickly to the new policy system in one upload instead of manually reentering that data.
The solution should also include configurable and reusable workflows, a human resources information system (HRIS) data exchange, an industry-specific table of contents, and single sign-on (SSO) capabilities. These features guide administrators through the system so they know how to easily set up user profiles, input information, and communicate with other users to manage company policies quickly and effectively.
Regulators require that policies and procedures are updated and communicated promptly. Look for policy management software that includes due dates, reminder emails, report subscriptions, and audit change reports, as well as dashboards for both employees and managers. These tools help everyone stay on their scheduled tasks, so the organization will be ready for an examination.
Powerful Communication Tools
Tracking employee policy and procedure acknowledgments is critical and automating parts of that process can save a tremendous amount of time. That said, having efficient policy acknowledgment is a minimum requirement. Bank leaders also want to be confident that employees grasp the policy. Look for a policy management solution that incorporates other features to ensure policies and procedures are communicated effectively. These include a quizzing function to determine if recent changes are understood and a centralized repository with full-text search, so employees can easily find the current versions of policies and procedures. Bookmarking is also a helpful function, so employees can pin relevant policies and procedures to a dashboard for quick reference. The ability to communicate and reinforce policies and procedures effectively is crucial to building a culture of compliance.
Policy management software should provide a solution to make an organization’s policy management process less expensive and easier to manage. When selecting new software, it’s important to compare it to the costs and time associated with each of the above factors of the current policy management processes to see where efficiencies can be gained.
Christopher Boersma, CRCM, CAMS, CISA, is a product manager at BAI, a nonprofit independent organization that delivers the financial services industry’s most actionable insights. For more information, visit www.bai.org.