Community banks and credit unions are growing accustomed to the strenuous regulatory reviews they must go through each year. However, they continue to struggle with managing an evolving set of government regulations and guidelines. In fact, according to the 2018 Community Bank and Credit Union Information Technology Outlook survey we conducted in the fourth quarter of 2017, 32% of respondents claim this is currently their greatest IT compliance challenge. Audits and exams, including internal audits, are designed to help ensure a financial institution’s environment is sound and compliant and that daily practices are in line with those standards. As a result, the entire exam process, from preparation to providing accurate responses to reviewing and remediating findings, can be an extremely time consuming and stressful process to complete.
Preparing for an exam has evolved into a time consuming task. Agencies are requesting an increasing number of documents and reports before the exam even begins. According to survey results, approximately 60% of respondents were asked to prepare more than 40 items for each exam or audit; and 31% of respondents indicated that they were tasked with preparing up to 40 items. With 48% of survey respondents preparing for and responding to between 11-20 exams per year, exam preparation is becoming a full-time task, one that can be overwhelming for a financial institution with a small IT department.
With these limited resources, many community financial institutions struggle to efficiently administer IT tasks and meet examiner expectations. To counter these mounting pressures, community financial institutions are looking for ways to more efficiently manage their networks and meet regulatory requirements.
Automating Exam Prep and Reporting
To help ensure community financial institutions operate more efficiently, securely and compliantly, IT professionals are implementing network management systems designed specifically for financial institutions to further decrease costs, increase performance, and improve their compliance posture. Utilizing such applications will increase efficiencies by automating the myriad of tasks associated with exams and regulatory requirements. Systems with built-in automated intelligence eliminate the need for IT staff to directly administer challenging and time-consuming tasks such as patch management, anti-malware updates, and reporting.
Network management systems designed with compliance in mind are able to account for updates to banking regulations and changes as they occur, which allows financial institutions to stay ahead of the curve and ensure adherence to all regulatory requirements. A comprehensive network management system can also automate, produce and manage custom reports for exams. Having a solution in place that automates reporting functions and requirements and is able to produce custom reports based on FFIEC requirements makes preparing for exams more efficient. Increased visibility to the network helps bank IT managers streamline processes and provide proper documentation to examiners. In addition, providing financial executives with the ability to receive live information for reporting purposes not only saves time but also improves operational efficiencies.
Regardless of location and size, banks and credit unions are all subject to largely the same regulations, and regulatory agencies are continually changing and increasing guidance requirements. It’s also no secret that governing agencies have become more stringent in their exams in the last several years and have been liberal in issuing citations to community financial organizations that have lapses or are not meeting regulations. Meeting expectations and adequately preparing for an exam are top concerns for many financial institutions. To help ease these compliance challenges and streamline compliance-related activities, financial institutions should adopt applications that will increase efficiencies with automation.