The First in a Four-Part Series on Creating Successful Operations

In today’s competitive banking environment, high-tech services are no longer an option, they’re a requirement. Indeed, technology can be a financial institution’s most powerful advantage, acting as a catalyst for improved business performance and enhanced customer service. The newest advancements let institutions reroute customers from lobbies to more cost-effective electronic alternatives and realize improved efficiencies throughout many data processing functions.

Yet with each trend in technology comes the challenge to maintain high levels of service, ensure accuracy along with security, and demonstrate even greater efficiencies in operations. While moving information electronically offers tremendous opportunities for cost efficiencies, it can also carry heightened risks.

From internal controls and security to regulatory compliance, managing the entire IT infrastructure must be part of an effective operations commitment. Financial institutions must strive to successfully integrate technology and functionality into day-to-day operations.

Going paperless

Technology trends are moving financial institutions ever closer toward paperless environments, making data-control processes an ongoing operational issue. One such trend is electronic check clearing and settlement.

Check image exchange and archive continues to advance and has both benefits and challenges. To be sure, check imaging empowers back office operations, increasing productivity and decreasing operating costs associated with transportation, labor, and postage.

However, poor execution can produce significant setbacks in customer satisfaction and costs and may even lead to legal ramifications. Issues involving short- and long-term storage, as well as backups, need to be addressed early on. Financial institutions must also take care to comply with all regulatory requirements. Ultimately, ensuring overall integration will allow operations to take full advantage of the very real benefits check imaging offers.

Internet banking has also raised issues regarding real-time deliveries. Financial institutions must examine how data is to be managed, synchronized, and validated across IT infrastructures. In addition, a good business continuity plan that focuses on disaster recovery and business disruptions becomes even more critical.

By and large, data solutions in the paperless environment should focus on system flexibility. Building a level of flexibility into IT architecture prevents the need for continuous reprogramming and redevelopment. It also helps institutions avoid the implementation of multiple solutions. Too many separate data processes often mean that critical information exchange becomes disconnected resulting in operational inefficiencies.

Maintaining security

Whether an institution’s data processing operations are handled in-house or outsourced, regulators have extensive requirements and examination procedures for technology and the activities it supports. Examiner trends show major areas of concern continue to be the security system and its testing, along with identity theft.  The security system should be comprehensive and various protection measures must be tested. A sound system will encompass firewalls, an intrusion detection system (IDS), and virus protection. However, it should also include employee training and written policies that are regularly reviewed and updated.

Charting a technology course

To remain competitive, institutions must continue to accept technology and adopt new technological advancements. In the process, data security will persist in being an ongoing challenge for operations and a sure focus of exams and audits.

Part two of this four-part series explores the operational focus on customer service.