Managing Changes

Things change.  Despite the view of the general public of banking as a somewhat traditional, unchanging business, those inside the industry know that change happens often, happens quickly, and sometimes happens without warning.  I’d bet we could all recall a time when there was an unexpected regulatory change that disrupted the way we do things and left us struggling to keep up.  For many of us, that’s the story of 2020.  So, what do we do about all of this change?

The solution to the problem of change is to have an effective change management program.  A change management program helps identify changes and helps determine how to appropriately respond to changes, particularly changes to laws and regulations.  This is a program that helps banks effectively implement changes to products and services as well.  It is essential that a bank’s Board of Directors and senior management establish a process that is effective, efficient and repeatable for managing change.  Similar to many areas of compliance, there is not a one-size-fits-all solution, and a truly effective change management system will need to be tailored to the bank’s size, risk profile and complexity of the bank’s products and services.  An effective change management program will identify changes, establish which parties are responsible for which changes, create action items and deadlines, test the planned changes, and evaluating the effectiveness of changes after implementation.

One key area in which change occurs, that institutions are often forced to be reactive, rather than proactive, is in the area of changes to laws and regulations.  Any time there are new requirements, it can have significant effects on operations, products and services offered, as well as the responsibilities of bank staff.  When things change, not only is it important to determine what to do, but also who will do what in response.

Another key area in which change occurs is the products and services offered.  Sometimes these changes occur due to regulatory changes, other times changes happen to be more competitive in the marketplace, and sometimes changes take place to realign the bank’s offerings with the bank’s vision and mission.  Institutions must continually evolve with consumer needs and expectations as not to be left behind.  Robust and fluid change management programs ensure that banks are smoothly launching new products and effectively implementing new services.

A third key area in which change occurs is technology, which affects everyone but often at different times and with different intensity.  Managing technology changes at the bank can include large-scale changes like system conversion and innovative changes like embracing fintech developments.  Technology changes often also involve new third-party relationships which also reaffirms the necessity for vendor management and oversight.  Technology changes are now a normal part of bank’s business models.  The appropriate management of technological changes will help institutions operate smoothly and comply with laws and regulations. 

Every bank is expected to have a process in place to ensure sufficient and timely responses to the changes that effect the bank’s compliance, and an effective program will likely look different at different institutions.  Smaller community banks may have a streamlined process, whereas larger banks may have a much more complex program.