Sorting through your bank’s many compliance software choices

By Wendy J. Meyeroff

Community banks today have more software systems to consider buying to address their compliance needs than ever before. And more technology choices means more opportunities to potentially achieve greater cost- and time-saving compliance efficiencies.

“This is a great time to review compliance—what’s working  manually, what isn’t,” says Heather Czermak, director of consumer compliance at Wolters Kluwer Financial Services, a compliance technology and consulting firm in Minneapolis. “That way you can not only find software that replicates what you’re doing by hand, you can identify areas that you can’t do now manually and [that] might benefit from software options.”

But the wide choice of software available to assist with a wide range of compliance functions can also make determining which system best meets your community bank’s particular needs more complicated. For example, odds are that an evaluation by your community bank’s IT manager alone won’t be enough to make the best decision on which compliance software your bank should acquire, IT consultants and compliance software service providers say. Nor should your community bank rely solely on its compliance officer to decide what software to buy.

The right fit

Every new software should also be evaluated to ensure it will function efficiently with your bank’s other existing IT systems.

All that evaluation can require input and buy-in from various employees or departments. “You really need some sort of committee, perhaps senior VPs of different departments,” Thomas recommends.

Software purchases for a compliance process should be considered from various points of view—from IT support to the compliance auditor to the software’s end users, agrees Matt Malone, senior security engineer at Vintage IT in Austin, Texas. “Ask yourselves, for example, ‘What do we need every time we do an audit? What’s the process?’” he recommends. “‘What problems do we each have with this process?’”

The process of evaluating compliance technology support needs should start with compliance risk assessments, advises Kent Conrad, director of technology for advisory services at McGladrey Inc. in Minneapolis. Without such a review banks can’t confidently know for sure what software system might boost efficiencies most, he says.

Perhaps the first stop in evaluating and possibly acquiring more compliance automation, some consultants say, might be with your community bank’s core processing service provider. The vendor can tell you what compliance functions are already available in your core processing system, what sort of training will be needed and other important details.

Often, core software systems contain utility programs that are not widely known, under-utilized or both. For example, some core systems have generic task-reminder functions built in that can help with compliance tasks and deadlines. However, more specialized “nagware” systems developed for specific compliance can be purchased from specialized vendors as well.

“Depending on the software’s sophistication, it actually generates a note to that person,” Conrad explains. “Some people aren’t even aware a certain utility is already in their core program’s capabilities.”

Then be careful to only compare apples to apples when evaluating compliance software. Such software can be as simple (and inexpensive) as providing a spreadsheet report or as sophisticated (and pricey) as providing guidance on writing policies and procedures. “The latter will cost more, but you’re getting 80 times more capability for your dollars,” Conrad says.

For that reason, consultants advise community banks to be diligent about defining what a software package not only delivers but also what it does not deliver.