The paradigm of banking has shifted at an unprecedented pace in the two years since the COVID-19 pandemic. Financial institutions of all sizes and geographical locations have had to quickly offer products and services digitally, manage their workforces remotely and restructure fee and account opening policies to be more inclusive. The magnitude of these changes necessitates a proactive approach to compliance and risk management now more than ever before.

Digital transformation

In 2020, seemingly overnight, financial institutions were forced to dive into digital transformations while closing branches. In a study, Forbes determined that 97% of organizations accelerated their digital transformation efforts in response to the pandemic. One of the impacts of this change is the footprint expansion of the financial institution for opening accounts.

No longer is the brick-and-mortar geographical location an impediment to customer reach. Now customers with a mobile phone, tablet or other internet-connected device can apply for accounts online regardless of their physical location as long as they are in the United States.

For financial institutions, this presents opportunity as well as risk. It is imperative to know who your customers are, where they are located and the behavioral risk they represent. Tools to assess behavioral risk, manage new account opening decisions and evaluate losses can mitigate the risk posed by the new customer base and should be put in place as part of the digital transformation.

Remote workforce

To add fuel to the proverbial fire, financial institutions needed to maintain regulatory compliance across a distributed workforce after branches were shut down. While the immediate need was to maintain or restore service to customers, it quickly became evident that monitoring and tracking remote employee activity to ensure compliance with policies and procedures was also imperative. With account opening specifically, it is critical that the same due diligence, at a minimum, is met to ensure employees are conducting risk assessments prior to account opening and opening accounts according to the financial institutions’ policies and procedures. Using tools that monitor activities and identify outliers in behavior can significantly reduce risk and losses.

Financial inclusion

The pandemic also elevated the important need for safe, affordable checking products and services for unbanked and underbanked consumers. Policymakers are increasingly interested in learning how financial institutions are supporting these consumers and evaluating the potential barriers excessive fees or rigorous screening might create.

During the pandemic, consumers outside the mainstream banking system faced considerable delays and difficulties getting government assistance payments. Approximately seven million households are without a checking or savings account to receive a direct deposit from the government or their employer, often resulting in months of delays and creating challenges for the consumers that are most in need financially.

In recognition of this, regulators in the U.S. are encouraging financial institutions to accelerate offerings of safe and affordable accounts to the unbanked and underbanked. For example, the Consumer Financial Protection Bureau (CFPB) examiners are looking into the processes financial institutions have in place for assessing risk and monitoring their account opening decision-making process.

Moving forward

To meet the needs of today’s financial institutions, you need robust tools to understand trends, patterns and variances in the account opening process, identify potential policy violations and spot optimization opportunities in the risk-assessment process.

FIS® offers a data-driven dashboard tool that provides a lens into critical key performance indicators, operational metrics and trends and risk assessment recommendations to improve your overall business. Financial institutions can now understand account approval rates, detect risk assessments that may be bypassed, identify branches that may need additional training or guidance to meet policy expectations and leverage reporting for regulatory and audit purposes.

Learn how you can answer the call for greater transparency into your account opening process. Contact us today to learn more about ChexInsights®.