Keeping up with compliance challenges now requires an assist from technology.
“It amazes me how much dependence credit unions have placed on spreadsheets and manual processes,” Diaz says. “This was the norm until just a few years ago. Many effective risk management software platforms are on the market that can be scaled up or down depending on the complexity of a credit union’s operations and risk tolerance.”
SchoolsFirst Federal employs several platforms to manage risk—from compliance to operations to member complaints.
“It’s difficult to pass muster with your regulator without having a robust, software-based compliance management system,” Diaz says. “Examiners frown on manual processes and single points of failure.”
Ihrig notes there’s been a shift in the supervision process. “It’s become more principle-based and less prescriptive,” he says. “But with this enhanced flexibility comes more attention to how your credit union is mitigating risk.”
SchoolsFirst Federal addresses compliance issues with a robust compliance management system (CMS) that takes a 360-degree approach to managing all areas of risk, Diaz says. “We have compliance involvement at all levels through both board and management risk committees. That approach has proven to be successful for us.”
Plus, addressing compliance during the idea phase of products and services prevents surprises and extra work on the back-end, he adds.
Bayer Heritage Federal uses a CMS to stay current with compliance changes and track audit and exam issues, Williamson says.
CUNA Chief Compliance Officer Jared Ihrig offers five compliance truths:
“I get email alerts when changes are on the horizon, and the CMS allows me to plan for change through a workflow process,” she says. “I can assign tasks to others, organize the change process, create training, and perform risk assessments.
“This allows me to see where we are in the process and what we still need to complete,” Williamson continues. “I can set up a timeline and get email reminders when items are coming due. The biggest benefit to me is peace of mind. I can see where I am and that I am making progress.
“It’s easy to get overwhelmed with compliance. It’s easy to get burned out. You need to know the little pieces are adding up to big results.”
Diaz recommends investing sufficient time in setting up the CMS to maximize its capacity and benefits right out of the gate. “Not doing so is tantamount to not reading the owner’s manual on your new car with its state-of-the-art technology—you’re not maximizing the value of what you are paying for.”
Once you understand the capabilities, use the system daily and work out of it, Williamson adds. “Utilization will bring a comfort level that you are on top of issues and are moving in the right direction.”
A good CMS automatically tracks regulatory implementations and the status of new rules and regulations, Diaz says. “Ideally, it’s set up to send automated milestone emails to relevant stakeholders at appropriate intervals.”
This is something credit unions can do internally, but using a third-party platform does have its advantages, he adds. “You can greatly increase efficiencies in your compliance area by incorporating vendor-provided executive summaries for regulatory changes, eliminating the need to spend time creating them in-house.”
NEXT: Mind the gap