Compliance Reviews and the Impact of Technology

By: Bill Elliott, CRCM, Senior Consultant and Manager of Compliance

When I was working in a bank, we had a conference room available for meetings for up to about 10 people. As with most institutions, there was always a battle regarding who could use the room when, as there was only the one room for meetings. So you had to sign up quickly or you had to camp out in there to make sure you had the room when you needed it. Of course, most of the time there was no hope – safety and soundness examiners, compliance examiners, IT examiners, internal auditors, external auditors, consultants, etc., were already in there, and the bank’s meetings would have to move somewhere else. All of you know the feeling – someone seems to be in your shop almost every day examining something.

Benefits of Off-Site Reviews
The days of having every portion of any examination, audit, or review on-site have come to an end. While some institutions still rely mostly on paper, many have a great deal of the required information in an electronic form. And if it is available electronically, much of what needs to be done can now be completed off-site.

There are clear advantages in an off-site review that go beyond freeing up a conference room. Whoever is coming into your shop will have expenses, sometimes significant expenses, such as food, mileage, lodging, etc. So every day that they do not have to be there saves you money. From the standpoint of the examiner, auditor, or consultant, every day that they are not on the road is a plus. Both parties benefit from off-site work.

Off-Site Compliance Reviews
As the head of our compliance division, I will put this in the context of compliance reviews. I can see no reason for a deposit review to ever be completed 100% on-site. Even if your bank has no technology, which is unlikely, Truth in Savings disclosures could be snail-mailed to wherever they need to go with no risk, as there is no customer information on those documents. Some banks can make many other portions of the review materials available electronically, further reducing the on-site time. We generally still have to come on-site for certain portions of the review, such as Regulation E error resolution reviews and Regulation CC hold notice reviews, as most banks do not store that information electronically, at least not yet. But the policy review portion of Regulation E and Regulation CC reviews can certainly be done off-site.

On the loan side, we at Young & Associates, Inc. are doing more and more loan compliance reviews off-site or partially off-site. As technology continues its relentless advance, we can do the necessary review work easily and efficiently. If all we are doing is loan file review, we can complete many of these reviews without ever appearing at the bank. Exit meetings are done via telephone, and with all of the other communication methods available today, there just is not a need to physically come to the bank.

We now have several clients with monthly or quarterly review schedules who see us on-site one time per year. And they have seen significant cost savings due to the reduced travel. By the way, if the work is being completed off-site, ask for a discount in the fee when you can. You do not have to ask for a discount for retainer engagements from Young & Associates, Inc. Every retainer engagement we send automatically has a discount feature built in that ranges from 5 percent to 15 percent depending on several factors, including the amount of consultant time that will be saved by not having to travel to your location.

We offer other services electronically as well. Our Virtual Compliance Consultant (VCC) program, which offers tremendous compliance support via a monthly compliance conference call for compliance discussions or training, compliance policy assistance, and access to all of our compliance-related products, is all electronic. We also offer board of director training live, using electronic methods. And the list will continue to grow.

Conclusion
As you contemplate this type of change, make sure that you involve your IT department to assure the information stays secure. Neither you nor your examiner/auditor/consultant need to have a breach. But it can be done, and your bottom line will be better off as a result.

To hear more about any of the compliance services mentioned in this article, or for more information on what Young & Associates, Inc.’s compliance department can offer your bank, contact Bill Elliott at 1.800.525.9775 or click here to send an email.