Taking Control and Mitigating Risk With a Collateral Management System

For many banks, managing the manifold economic and internal risks has been a stressful and very manual process.

Truly gaining a comprehensive overview of all the collaterals associated with a bank’s lending business is often the top desire we hear from clients, followed by in-depth reporting and collateral management workflow capabilities. Historically, collateral management in wealth management lending has often been a siloed process with each department managing it individually. And the need for additional resources in credit and risk departments has been a growing trend. In our research, the processes in which banks are managing their collaterals vary but often involve collecting data from a variety of sources, tracking in spreadsheets manually, and pulling rudimentary reports from the core banking system that only gives basic aggregated information at best.

Banks need a way to monitor and manage collateral for all their lending products, not just securities-based lending. An enterprise collateral management solution allows credit and risk professionals to:

• Gain an accurate and up-to-date overview of collaterals across different asset and loan types in real-time for marketable securities, if desired.
• Set up multiple credit policies.
• Perform portfolio concentration analysis for more in-depth insights on potential risks.
• Pull pre-defined and custom reports quickly and efficiently.
• Automate collateral release support.
• Assess borrower’s risk across the entire relationship through data visualizations and modules.
• Conduct in-depth “what-if” stress testing for marketable securities to proactively mitigate any potential risks.

Make Decisions and Act With Efficiency
Many organizations are siloed and visibility across groups is an organization struggle. The lack of visibility across teams can cause operation and client-facing staff to struggle with making timely and informed decisions. A digital, streamlined enterprise collateral management solution can create efficiencies for cross-team collaboration. Your bank’s team should look for solutions with features like tools, reports and workflows that enable them to make informed decisions and act with efficiency, including:

• Automatic calculation of collateral release.
• Portfolio concentration analysis to provide more in-depth insights on potential risk.
• Rule-based and streamlined workflows to support collateral call management in scale with efficiency and at a reduced cost.

The standards for bank risk management and customer service today are at some of their highest levels today; management teams are looking for immediate answers to their questions in this uncertain environment. It is essential that banks have a technological solution that equips their team to have the answers at their fingertips to provide the service clients expect and deserve. Now more than ever, financial institutions need a collateral management solution that provides speed, transparency, efficiency and a streamlined digital workflow to support the new hybrid working environment.

They are Watching You: How to Handle Complaints

11-8-13-Wolters.pngSince opening its doors in July 2011, the Consumer Financial Protection Bureau (CFPB) has gone the distance to make sure consumers of financial services know they can lodge complaints pertaining to a broad range of financial products and services. The CFPB receives complaints from consumers concerning credit cards, mortgages, bank accounts or services, private student loans, consumer loans, credit reporting, money transfers and debt collection for institutions of all sizes.

Regardless of the size of your institution, it is prudent to have a formal, fully functional process for receiving, escalating, analyzing and responding to consumer complaints. Meeting the expectations of regulators where consumer complaints are concerned not only shows the bureau your bank is responsive, but also serves as a way to champion the consumer experience and stand out from the crowd.

Complaint Handling from the Examiner’s Point of View

Regulatory Expectation: Consumer complaints and inquiries, regardless of where submitted, are appropriately recorded and categorized.

Depending on the overall size and complexity of your organization, this can be a serious challenge to structure and organize. Keep in mind the following as you determine what controls to build into the complaint intake and tracking workflow:

  1. What’s a complaint?
    Has your institution clearly defined what constitutes a complaint? Well managed and carefully analyzed complaint data provides the opportunity to make key revisions and/or enhancements to products and services, and demonstrate to your customers that you are listening.
  2. Complaint submission
    Consumers seeking to file a complaint should be allowed to do so through mail, email, or phone. Your organization will need to ensure that the infrastructure is in place to fully support all channels for complaint intake. All complaints, regardless of origin or point of submission, including verbal complaints, must be registered and assigned ownership and accountability for response and timely resolution.

As you address these considerations, apply the same thought process to third-party service providers that directly interact with your customers or support your company’s products and services.

Crossing Your T’s and Dotting Your I’s

Examiners will request and review records of recent consumer complaints against your institution from the prudential regulator, from state regulators, from state attorneys general offices or licensing and registration agencies, and from private or other industry sources. It will be essential that your policies and procedures for receiving, escalating and resolving consumer complaints and inquiries from all sources and points of submission are fully defined and clearly documented.

Regulatory Expectation: Complaints and inquiries, whether regarding the entity or its service providers, are addressed and resolved promptly.

In order to not only meet, but also exceed expectations for timely response to complaints, the process you establish for complaint intake should time stamp the complaint and establish an estimated timeline for response, as appropriate. This recognizes, however, that complaints differ in severity and required course of action for response and resolution. As such, policies and procedures addressing timeliness of response should factor for these differences.

Search and Scan

Regulatory Expectation: Complaints that raise legal issues involving potential consumer harm from unfair treatment or discrimination, or other regulatory compliance issues, are appropriately escalated.

Proactively scan your complaint database to identify complaints alleging deception, unfair treatment, unlawful discrimination, or other significant consumer injury. The list you build should be as comprehensive as possible. This will require dedicated task assignment and accountability for maintaining an effective surveillance process.

Complaints alleging discrimination or presenting an elevated legal risk must be escalated to specifically identified departments or individuals within your organization to ensure proper analysis and handling. If your institution maintains multiple customer support centers, enforce a uniform set of complaint escalation practices.

If It’s Broken, Fix It

Regulatory Expectation: Complaint data and individual cases drive adjustments to business practices and result in retrospective corrective action, as appropriate.

Of great interest to regulators is how actively your institution will monitor complaints to identify issues and trends that may require changes in products, procedures and/or training. Examiners will seek to review whether internal evaluations of consumer contacts are shared through regular reports to the board and senior management, and whether such information is used in modifying policies, procedures, training and monitoring.

With effective complaint handling processes firmly in place, you are then in a good position to ultimately drive change should it be determined that a weakness or defect in a product, procedure, system or employee training has been identified. You want to be able to demonstrate that appropriate corrective action resulted, based on efforts to understand the root cause of the issue leading to the complaint.

The Bottom Line

Based on the nature and/or number of complaints received, complaint-driven data is going to be one of the first points of review by regulators. The information could signal weaknesses in your institution’s compliance management system (CMS). Regulators will look for how proactively you manage complaints and demonstrate direct learning from an analysis of your complaint data. It also goes a long way in improving your relationship with your customers, perhaps the most important relationship you have.