Two Ways to Crack the Efficiency Nut

The costs of regulatory compliance are serious, comprising 7.2% of noninterest expense, according to surveys conducted in 2015, 2016 and 2017 by the Conference of State Bank Supervisors. But the costs of noncompliance are arguably higher – especially when it comes to compliance with fair lending rules and the Community Reinvestment Act. Remedying these regulatory infractions can be costly and distract banks from executing their strategy.

Most of a bank’s compliance budget is tied up in personnel, according to the CSBS surveys, but technology can help ease this burden.

Southern Pines, North Carolina-based First Bank, with $6 billion in assets, took a “leap of faith” when it left an industry-leading Home Mortgage Disclosure Act compliance tool to adopt a solution offered by NTRUPOINT, a provider of compliance analytics software and services. The company impressed First Bank Compliance Officer Kevin Saunders, particularly with their receptiveness to feedback from his bank – a significant change from their prior vendor. “[NTRUPOINT has] a good tool to start with, but if we think something could be a little better, we can make that recommendation and oftentimes we see that enhancement coming,” he says.

The bank’s compliance team uses the tool to visualize data and highlight risk areas to help comply with CRA and fair lending rules, including HMDA, sharing reports with the executive team and board. Putting the solution in use was easy: Since it’s hosted in the cloud, there was no integration with the bank’s core systems and no need to engage the bank’s technology staff.

“[We weren’t] able to visualize and wrap our heads around all this data. We have thousands of loans, and now there are hundreds of data points per loan, and when you look at all that, it’s hard to figure out what an examiner or community activist group might home in on,” says Saunders. A better understanding of the data has allowed the bank to be more proactive, which regulators appreciate. The bank can even quickly adapt as regulatory expectations change, he adds.

But it’s not just the technology that Saunders finds beneficial – he calls them “fair lending experts” for the bank. If regulators have questions, NTRUPOINT is just a phone call away to provide additional analysis and support.

Adopting a compliance tool that is more up to date, with a vendor that is more responsive to the bank’s needs, has resulted in roughly 50% in cost savings for the bank, reports Saunders.

NTRUPOINT was a finalist in the Best Solution for Improving Operations category at the 2019 Best of FinXTech Awards. Sandbox Banking was the category winner. (Sandbox also won the Best in Connect category.) Finalists were selected from the most innovative solutions found in the FinXTech Connect platform.

Hydrogen, another category finalist, leverages blockchain-based protocols and a library of application programming interfaces to help banks build new products and platforms. It worked with Toronto-based TD Bank Group to launch a goal-setting tool for the bank’s wealth management division earlier this year. Giving immediate advice to customers online allows the bank to serve them through a more efficient channel.

Given Hydrogen’s background in the robo-advice space, “they had the right balance between technology expertise and an understanding of the business,” says Jay Gedge, oversees automated investment management and advice in TD’s wealth digital innovation team. “The capabilities they bring across portfolio management and goal planning help us accelerate the work we’re doing to bring innovative solutions to market for clients.”

Within three months, Gedge says that 20,000 customers adopted the tool. And TD was able to deploy the solution faster – in just 10 months – than it would have through other vendors or internal development.

Hydrogen’s plug-and-play capabilities allow TD to expand the tool’s use throughout the organization. The two teams check in quarterly to walk through TD’s product roadmap and where Hydrogen can help. “They may quickly come up with something we can apply within the context of the work we’re already doing, or we may be able to find a place in our roadmap in terms of how mature the idea is or how it will impact value for our clients,” says Gedge.

For these banks, collaboration and expertise helped form the secret sauce to deploying technology solutions that meet a bank’s goals.


Emily McCormick

Vice President of Editorial & Research

Emily McCormick is Vice President of Editorial & Research for Bank Director. Emily oversees research projects, from in-depth reports to Bank Director’s annual surveys on M&A, risk, compensation, governance and technology. She also manages content for the Bank Services Program. In addition to regularly speaking and moderating discussions at Bank Director’s in-person and virtual events, Emily regularly writes and edits for Bank Director magazine and She started her career in the circulation department at the Knoxville News-Sentinel, and graduated summa cum laude from The University of Tennessee with a bachelor’s degree in Spanish and International Business.