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Financial Institutions: Next Steps to Protecting Customers & Preparing for the Next Pandemic

By Ken Simmons, Managing Director, SEDA Experts LLC


Sixty days is a long time for people to be sequestered to their homes. Even the few people who are prepared for long-term economic challenges are beginning to feel the pinch. The vast majority of bank's customers budget paycheck to paycheck. Community Banks are making sure their customers are cared for and serviced effectively.


Some are asking why? We should be asking “What Now”?


Protecting customers & their assets

As we prepare for What Now(success), here are a few action items for financial institutions to help protect their customers & their assets:


  1. Provide proper oversight of your at-risk customer’s accounts. Many have withdrawn funds from their accounts to hold in safe-keeping (mattress or dresser drawer). Financial institutions should call these customers as things settle to a “new” normal, reminding them to return the funds to the safest place (the bank).

  2. Monitor at-risk customers transactions. We have all been sequestered with family and neighbors. Financial institutions should make sure at-risk customers have not been financially exploited during this time, monitoring closely transactions, “new” or added relationships and those that have established online banking during this epidemic.

  3. Monitor customers serving as guardians and custodians of accounts. Good people “sometimes” make poor decisions. As financial hardships continue, customers serving as guardians, custodians, those (just-in-case) joint owners and those having Power of Attorney may tend to exploit account balances. The same accounts they have effectively managed in the past become easy targets to resolve their own financial woes.

  4. Trust but Verify: Trusting employees are working in the best interest of the customers, but always verify authority and obtain proper identification when conducting transactions.

  5. Be prepared to identify illicit acts and potential criminal activity. Fraud, insufficient funds, kiting activity is on the rise. These occurrences traditionally increase during difficult financial seasons. None of us have experienced potential hardships as we face today. Financial institutions should be prepared to identify illicit acts and potential criminal activity. Enhance employees' knowledge on fraud schemes, check fraud, and social media plots designed to take advantage of weaknesses.

  6. Customers may increase disputes regarding pre-authorized transactions. Be prepared to meet the banks responsibilities for responding to disputes.

  7. See Something, Say Something (or better yet, report the activity to the BSA Officer).



Protecting Personal Identifiable Information (PII)

The term “PII” refers to information that can be used to distinguish or trace an individual’s identity. This may be single data element or when combined with other information that is linked or linkable to a specific individual.

Today’s season highlights the need for Financial Institutions to increase the oversight of accounts and relationships. While people may be afflicted with health issues; these events create an increased risk of our sharing personal information with relatives, friends, thieves and fraudsters. Distinguish one of these people from the other is crucial.

Financial institutions tend to help customers through this time, but it is extremely important to maintain existing controls to protect the identity of their customers and to protect customer assets held by the bank. They cannot rely on the statement of others when performing their duties.


Business Models change with the New Season

This year many age-old practices have changed. Remote banking, drive-through tellers and the use of e-sign have all increased. We rely more on alternatives for face-to-face interaction and customer identification. While some aspects of life may revert back to “normal”, other areas may have found a “new normal”. Financial Institutions should take time to adjust their personal business model for customer outreach & sales; expected communication techniques and what actions of our customer are suspicious or unusual.

Financial Institutions should review the new ways that older customers have begun to interact with the them during these times and begin looking at the future business model with this in mind. A new found reliance on new technology may become the way of life for some customers. It is important to look at your future production channels with that in mind.

How or what financial institutions consider to be suspicious or unusual is most likely a subject that they have not thought of. However, changes in “life”, communication, interaction, and simply the way banks customer’s “do” banking must also shift financial institutions' thoughts and understanding of suspicious and unusual activity.


Pandemic Planning (a look back)

We were prepared for everything but a illness-based pandemic (storms, facility damage, an act of terrorism or electrical grids failing).

It's time for financial institutions to assess and evaluate the Pandemic Plan they had in implace, by conducting a look-back at how the company, as a whole, experienced success and failure. This is a requirement of an effective pandemic plan.

Now is the time for financial institutions to break down all of the steps that they have taken to effectively deal with the current pandemic. Taking in consideration where did the organization go right? What can be improved? How well did the current pandemic plan guide the bank through the process?


Chances are that the pandemic plans in place were nothing in comparison to the reality of the event. It is crucial to take the lessons learned, as well as the successful ideas implemented and build out the current plan to better prepare the financial institution for a similar event in the future.


Taking these simple steps of preparation will help to alleviate further panic in the future. Every company may have been a bit dis-functional during this pandemic. Let’s be better prepared for the next.


Kenneth Simmons, with over 30 years of industry experience as Executive Vice President at leading financial institutions, and as Bank Examiner at OCC and FDIC, is a top expert in regulatory compliance, anti-money laundering, bank secrecy act, and financial crimes risk management.

Mr. Simmons is a Review Board Member & Faculty at the Association of Certified Anti-Money Laundering Specialists, and the North & South Metro Atlanta Compliance Roundtable Founder & Chairperson at the Community Bankers Association, and the founder and CEO of Compliance and AML Solutions.

#expertwitness #litigationfinance #FDIC #Compliance #AML #OCC

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