In recent days and months, there has been much discussion about the challenges small banks face to comply with increased regulatory requirements, particularly those stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act. Though the costs of compliance have increased and can prove burdensome, especially to small banks, industry observers and participants who approach the requirements with a glass-half-empty attitude are missing an important opportunity: If community banks take a strategic approach to compliance, they can differentiate themselves from the competition.
Going Beyond the Minimum
The benefits of thoughtfully implementing new regulatory requirements have been demonstrated in the past. Consider the know-your-customer requirements that mandated that banks obtain more information about their customers’ behavior to better verify customer identities, which in turn helps identify suspected money laundering activities. When the requirements went into effect, some banks simply did the minimal amount that was required.
Other banks took a more strategic approach. Some saw the new information-gathering requirements as the chance to truly get to know their customers better and enhance the level of service they provide. For example, some institutions developed dynamic discussions with account applicants, with bank staff varying their follow-up questions based on the information new customers provided. These fluid conversations were designed to create better account-opening experiences and to yield insightful data to better serve customers and support new product and service development.
Setting a Community Bank Apart
Community banks can take steps to successfully combine compliance efforts with a focus on enhancing customer service.
Small but Mighty
Every bank, regardless of size, will encounter challenges in meeting new regulatory requirements. Finding the silver lining in increased compliance efforts and costs can position community banks as stronger, more competitive, and more focused on their customers’ needs than ever before.