Jonathan DeVore

By: Jonathan DeVore on November 7th, 2021

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How to Ensure Compliance with Bank Policies and Procedures

If you work at a bank, just mentioning the word, “compliance,” has you on the edge of your seat.

Compliance in the banking industry is huge. There are severe consequences for failing to comply with procedures:

  • Losing customer money
  • Employees losing their jobs
  • Losing the bank’s charter
  • Losing customers’ trust
  • Examiner and audit findings

So, it makes sense that you landed on this article. You would be the ultimate hero if you discovered the secret sauce to ensuring compliance on every transaction.

My time with ScreenSteps (a knowledge base software company) helping multiple companies, across multiple industries document their companies’ policies and procedures has made me realize — there is no perfect way to ensure your employees are compliant 100% of the time. You have to account for human error.

However, when you have your employees follow your written policies and procedures on every transaction, it increases your chances of maintaining compliance. But many factors play into this.

In this article, I explain where banks go wrong with compliance. Then I take a closer look at the impact of writing policies and procedures that anyone at your bank can use.

Factors affecting compliance at your bank

Before we dive into the strategy for maintaining compliance at your bank, we first need to understand the three different types of compliance and the two main groups charged with carrying out compliance.

3 ways to measure compliance

When banks are audited for compliance, there are three parts to a compliance audit they are evaluated on.

1. Employees completing compliance training

Examiners and auditors will check reports to make sure that every employee completed compliance training and passed the assessment.

This doesn’t measure an employee’s competency at applying regulations and policies — it’s just checking that they have been made aware of them.

2. Written policies and procedures

With banking, there are regulations set at both the federal and state level. Part of being compliant is showing that written policies and procedures exist and that they adhere to those set rules and regulations.

This part of the compliance audit reviews a company’s documented policies and procedures and makes sure they align with standards set by governing bodies. 

Essentially, this part of the compliance audit is just asking, “Does this documentation exist?” If it is part of the bank’s documents, then they pass. This step is equivalent to turning in the assignment where you included everything mentioned in the instructions. It checks off a box.

3. Performance compliance

The third part of the audit is reviewing transaction and customer records to determine how well employees follow those documented policies and procedures on the job.

This part of the compliance audit is asking, “Can your employees follow your documented policies and procedures correctly?

It is evaluating your employees’ ability to perform procedures in line with what it is in your written policies and procedures.

2 groups carrying out compliance

While the entire bank is held accountable for following compliance procedures, compliance most directly affects two groups of employees: (1) the ones writing the policies and procedures and communicating them out to employees (2) the ones carrying out those instructions.

1. Teams writing and communicating the policies and procedures

Banks rely on their compliance/legal department and director of operations to oversee the first two aspects of the audit.

Other groups such as your Learning & Development (L&D) team or training department are also looped in to make sure that employees are made aware of regulations and policies by taking courses or doing classroom training.

Often, the main goal here is to be able to say that people have done the training and that the necessary documentation exists. They make sure the required language is included in the documents and that they map to regulations.

Then they make sure employees have completed the courses that provide an overview of regulations and have read (not necessarily understood) the written policies and procedures.

2. Frontline workers and operations leaders

The main goal of operations managers, leaders, and frontline workers is to perform the procedures. Their situation is “Here’s somebody in front of me. What do I need to do?”

The operations leader needs to make sure employees can do everything that is written in the policies and procedures the legal department puts together.

The thing is, the frontline employees — those at the branches or in call centers who speak to customers — don’t usually know the legal language. Nor do they know how to connect the dots between regulations and their day-to-day tasks.

Those policies and procedures weren’t designed for frontline workers and are confusing to use.  

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Where banks are going wrong with compliance

There is a huge disconnect between retail (employees at a branch using the procedure) and the compliance/legal department. The two groups of employees get hyper-focused on their own goals instead of coordinating to reach an overarching bank goal.

In the end, the two groups are clashing and making it more difficult than it needs to be to remain compliant with regulations (and overall best practices).

If you really want to ensure compliance, you need to align both of these groups so that they can help each other out.

To ensure compliance, you need to get your employees charged with writing policies and procedures to recognize the importance of the performance aspect of compliance.

This means written procedures will need to be designed to help frontline employees (and all other employees for that matter) do a transaction. And you’ll want to write it in a way that results in the employee being compliant with regulations.

In other words, you need your procedures to be simple enough that employees can follow and understand them while in the workflow.

The solution: Align your compliance teams with one common goal

You may be saying, “We already are aligned.” But if you ask your compliance/legal team and your director of operations what their goal is, they’ll tell you something along the lines of, “To have policies and procedures that include everything necessary to be compliant with regulations.”

If you ask your L&D department what their goal is, they’ll tell you something like, “To make sure all employees have taken the course and passed the assessment.”

And if you ask managers and frontline employees what their goals are, you’ll hear, “To make sure I don’t screw anything up.”

Those are all related goals, but they aren’t aligned.

Keys to an aligned team

What alignment looks like is this:

  • Compliance/Legal and Operations: Help employees be compliant as they perform each transaction and have a customer interaction
  • Training/L&D: Help employees be compliant as they perform each transaction and have a customer interaction
  • Management and Employees: Perform each transaction in a way that is compliant with regulations and laws

If you are aligned, then everybody is focused on helping employees perform procedures correctly.

That means policies and procedures are written in a way that makes the documents compliant AND easy to follow by employees (so they can use them each time).

It means that training and courses help employees understand how regulations are carried out in day-to-day operations and would include exercises where employees practice using procedures to perform procedures correctly.

It means that employees are pulling up and following written procedures for each transaction so there are no mistakes made.

Bottom line — your compliance and operations teams need to create resources that your employees can pull up while talking to customers and performing tasks. Your training department needs to help employees learn how to use those resources. And your employees need to use those resources when performing each transaction.

You can do this without compromising passing your written policies and procedures audit.

Writing Tip: If you use a knowledge base to document your procedures, you can add foldable sections to include more complex language so that the “you must include this” information makes it into your policies and procedures. Using this design element, you have everything you HAVE to include while still writing something your employees can follow.

If you use a Word or Google doc for writing policies and procedures, you can use colors, bolding, indentations, italics, etc. to help make a guide more skimmable.

How to write policies and procedures your frontline workers can follow

Maintaining compliance with written policies and procedures and supporting frontline workers with documented procedures is not an either/or situation. Your compliance authoring team and operations team/frontline workers can work together to ensure compliance at your bank.

So, how do you write procedures that frontline workers can follow while still maintaining compliance?

With ScreenSteps knowledge base, we provide tools that make it easy for your content authors to include the information they need for compliance while providing a clear path for your frontline workers to follow in the guides.

Whether you use ScreenSteps, use another knowledge base, or document procedures in another way, here are four steps to writing clear bank policies.

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About Jonathan DeVore

Customer Success