Twice pregnant. 18-month bank exam cycles.

michael's picture

Now that the Federal Banking agencies allows financial institutions in the $500 million to $1 billion asset range to be eligible for 18-month examination cycles, what will these 617 additional banks do with the opportunity? 

I've seen what banks and credit unions go through to get ready for the exam. 

To paraphrase Jimi Hendrix, the call to action goes something like this.
  "Hey Joe! Where you going with that loan in your hands? We need that back in the vault by Tuesday."

"Will somebody check Bev's desk? I know we got that updated flood insurance in last month."
"*!%#$&!, who put this in the file?! Good thing I checked it before we gave it to them."
"Jill, when you get done scanning, can you catch up on filing those 3 boxes of trailing docs?"

The effort that Credit Administration and Loan Operations go through to get the files exam ready is waste. 
Period.
Any documents that exist have already been touched once. 
And don’t' think just because a bank or credit union has Nautilus, Director, Synergy, or any other document imaging/ECM that it gets any easier.

It takes a high-performing, on-going process to leverage a content management system correctly and ease this compliance burden.
A high-performing digital loan file process has these 5 characteristics:

  1. An appropriately granular selection of document types.
  2. Keep distinct images versus lumping them all together.
    This allows the bank to control what is available to view and by whom.

  3. A capture capability that let's anyone with a pulse & a need to add to the digital file.  
  4. In CD-speak, it needs to be bonehead simple with auditable security.

  5. Ongoing put & get education.
  6. Content creators, recipients, and viewers all need to speak the same language to know where to put and get items. 
    This is success factor #1.
    Failures result in comments like "we have imaging but I can't find anything".

  7. A search capability to see the complete picture.
  8. Examiners (and bankers) need relationship views, not just loan-by-loan. 
    As new content is added to the digital file, it needs to be automatically related to its relationships. 
    Relying on people to manually link everything that is already known electronically is a symptom of lacking in the InfoPro department. 
    This contributes to "we have imaging but I can't find anything".

  9. An in-process QA function that uses images in the process.
  10. The QA that we have the most recent and legible financial statement in the digital file is the credit analyst viewing and spreading from it as soon as it is captured. 
    Everything that is captured in #2 should either satisfy a requirement or trigger some action. 
    Otherwise, why capture documents if they are not needed or never viewed?


A paperless exam should be the first stop on your 18-month roadmap. 
If you still have a paper loan vault, check out this post.

The next waypoint should be a remote and paperless exam. 
Confidently give examiners remote access to your digital loan files knowing exactly what they can and did access.

18-months only seems like a long time if you're bearing children back-to-back.
Treat this project like grandkids.
Let someone else do the work and you enjoy the fruits of their labor.

-CroalDude


About Agile Banking
Agile Banking provides consulting, solutions, and skilled digital laborers that address the full lifecycle of information management.
Bank-In-A-Box is our preconfigured for OnBase imaging and workflow system that is easy to use and integrates with any core system.
Loan Vault Decimation is our turnkey solution to quickly and accurately scan and index entire paper filing systems.
Record Schedule for Banking is our nationally compliant record retention schedule that manages electronic records in any ECM to final disposition.
ExactImport automatically transfers documents between OnBase and ExactBid's RIMS appraisal management system.

We are passionate about process and data, and experienced as bankers.
We are where information management works!