How Banks Are Managing Risks During the Pandemic

June 13th, 2021

This has been a challenging year for the finance industry. Financial establishments, such as banks, were forced to alter business procedures and operations with urgent immediacy when the crisis gained momentum. To do this meant a rise in uncertainty, as banks were forced to accept more risks.

Operational risk is associated with a failure in the operations of a financial institution, and can be traced back to failed or inadequate processes, management, or employees, or losses due to fraud or system failures. When wellness became a priority, banks had a sudden shift to a remote workforce, and operational resilience relied heavily on technology. Digital transformations which were originally planned to take several years happened in several weeks. This includes the launch of online banking capabilities so customers can manage account activities remotely. The adaptation of an omni-channel presence required banks to train staff in new capabilities, be they at the branch office, call center or operate online. Online work proficiency includes cybersecurity and cyber-hygiene. Banks have always been aware of security risks, and with the sudden shift to digital channels, hackers, identity fraud, and phishing emails will remain a concern.

Operational risk also includes transparency between banks and employees, and employees and customers. As remote work continues, bank leaders worry about the erosion of company culture. Things have panned out well so far due to the relationships banks had prior to the crisis; but moving forward, banks will need to find ways to form and reinforce new relationships, not only in the workforce but also with customers. Regularly surveying employees for feedback and recognizing trends in customer care will help banks reconsider management styles to prevent feelings of isolation and streamline daily processes.

Compliance risk is related to those legal penalties a bank faces should it fail to follow the regulatory standards put down by the industry. New operating procedures and customized banking services can put banks under scrutiny. During and after the crisis, banks must check with proper legal counsel to ensure company changes are in compliance with industry terms but also satisfy client needs in a fair, ethical manner.

Credit risk is the potential for borrowers to default on their obligation to a bank. This is the most significant risk banks face, and if the economy enters a recession, there will be a surge of debt defaults. Many companies and customers will be unable to pay back their loans, and banks will suffer huge losses. This, of course, is a financial risk. Bank support for customers during the crisis has taken many forms, including easing the policies for collections on negative balances, deferred payments, and overdraft fees. Concerns rise though as more customers ask for credit, and banks are forced to be more lenient in how they define financial hardship. Some of the world’s largest banks have prepared for worst-case losses by setting aside substantial reserves in loan loss provisions. Smaller banks, however, are unable to take such preventive measures and may not fare well if conditions worsen.

While mechanisms are in place to manage risk, and thus minimize the negative effects risks can have on the productivity, financial health and overall reputation of an institution, it has taken a great deal of effort by global financial leaders to navigate the ups and downs of the crisis and still serve customers. Risks can cripple a business, and while institutions have done well so far to monitor risks under pressure, it is necessary that risk models plan for a long-term duration of the crisis, since its end is nowhere in sight.

Managing Banking Employees Remotely

October 6th, 2020

2020 has spurred a series of changes, most notably the decision by thousands of businesses to manage employees and coordinate operations remotely. The banking industry is no exception. New priorities have forced banks to very quickly adjust to a remote world, where much of their workforce stays home. This was a shift a lot of financial institutions were ill-prepared for, but most have adopted new procedures and best practices to counteract issues with logistics and security.

Employees no longer operate within sight of the bank offices, so banks keep operations insight through technology. Company-issued devices with special protections, such as multifactor authentication, are mandatory. These devices, secured with corporate malware protections and local firewalls, stave off most security incidents. Many banks also use a virtual private network (VPN), which keeps data on a server back at the organization; employees can log in and out of the VPN, but nothing remains on their device.

To further protect bank security and client lists, it is necessary for institutions to educate and train their employees on the use of bank-owned and managed hardware and heightened threats, such as phishing emails and fraud scams. Password security and cyber-hygiene are also important. Some banks employ monitoring tech, which allows them to track and visually monitor employee activity on bank-issued devices. With this comes the need for a remote work policy that outlines for employees the processes and tools needed to do their jobs, as well as the objectives, communication frequency, and transparency of their work.

Traditional banking was for the longest time a physical, in-person platform. In recent years, banks and other lending institutions automated complex tasks, like account openings, loan applications, and money transfers. This year, however, has seen customers flock to digital channels to perform their banking activities, and any bank that did not offer online means before must now hurry to automate capabilities. As a result, employees must be trained and familiarized with the newly automated systems and workflows, so they can handle complex interactions virtually instead of in the office. This, in turn, can create new, trackable actions that help measure productivity.

Managing a remote workforce has other challenges. Supervisors must navigate team responsibilities, identify roadblocks, and keep an open line of communication in a virtual environment. To keep members accountable, banks will likely use more project-oriented performance management approaches. Performance will be managed based on how well a team (or individual) meets project deadlines and expectations, not on their attendance in the office.

It does not appear that remote work is going away anytime soon, but recent studies show remote workers have higher job satisfaction. They have fewer distractions and a greater ability to focus than if they were back at the office. They achieve a work-life balance that was not realized before, and companies see a boost in productivity. For this reason, many banks are reconsidering operations. JPMorgan Chase, for instance, has employees on a rotational schedule. Depending on the type of business, they may work from home two days a week, or one to two weeks a month. Some portions of their workforce may stay remote permanently.

Until conditions improve and the wellness of staff and clients is no longer a guessing game, banks will continue to navigate the challenges of a remote world. Many seem to be doing well at this, investing in software vendors, testing AI, and reconstructing work policies and ethics. It may be, when conditions improve, some banks will be ahead of the industry game and more progressive than ever before.

CECL FAQs FOR THE C-SUITE AND BOARD MEMBERS

March 11th, 2018

Question 1: What is CECL?

The Current Expected Credit Loss model (CECL) is the new accounting model FASB has issued for the recognition and measurement of credit losses for loans and debt securities. The new standard will generally be effective for SEC registrants’ 2020 financial statements and in 2021 for banks that are not SEC registrants. For banks that are not considered Public Business Entities (PBEs), the effective date will be at December 31, 2021, alleviating them of the requirement to file CECL-based call reports until then (please note that “public” is according to the FASB’s definition, which is not the same as other commonly-used definitions – see question 11 for more information).
Early adoption is permitted beginning in 2019. Accounting for loan losses is at the heart of bank accounting, as it affects what banks do – lend money and collect principal and interest. Amounts that banks do not expect to collect will be recorded in the allowance for loan and lease losses (ALLL) and in an allowance for credit losses on Held-To-Maturity (HTM) debt securities. Any additions to the ALLL are recorded as expenses, which reduces bank capital.

Question 2: What’s at stake with the accounting change?

FASB is replacing the current “incurred loss” accounting model with an “expected loss” model – CECL. Banking regulators have referred to CECL as “the biggest change ever to bank accounting.” This standard is expected to have a huge impact on the costs to prepare and audit the ALLL, how investors analyze the ALLL, and how banks manage their capital. While initial estimates in 2011 indicated 30-50% increases in the ALLL would result from CECL implementation, independent estimates since then have been significantly lower, as the CECL estimate is largely dependent on a company’s forecast of future economic conditions. For that matter, certain aspects of CECL may actually lower allowances in some portfolios. Therefore, while it assumed that ALLL balances will generally increase, the extent of the change is unknown at this point and due to a changing economy, estimates could change often between now and the 2020 implementation date. CECL requires significant changes to the data a bank maintains and analyzes. Bankers, regulators, and auditors are in agreement that more granular data and analysis will be required and new performance metrics will be needed.

Take the Plunge – Pay More

July 27th, 2016

One reward strategy you can employ that doesn’t involve following the popular drumbeat of negative messages and takeaways.   Other functional departments (i.e., Marketing, Engineering, Advertising) have already taken a different tract to deal with the new realities.   Innovative minds set themselves apart, pushing brand identification to carve out market niches away from the beaten path.

HR can lead the way!

A Different Mindset!

Companies fear wasting money on employees who don’t perform, so they often limit the administrative increases so often granted by their reward programs.  They feel they can’t afford a strategy that increases payroll without a corresponding increase in ROI.  However, they could increase the amounts paid to key employees while restricting the level of those who perform . . . less well.  That would place the high achievers at a fair or even generous pay level, but these winners would be only those who deliver an ROI back to the company.  You can afford to reward high performers, can’t you?

Employees who produce results are worth the money.  If you’re fearful of overpaying those who aren’t performing, you hold the solution in your hands / policy manual.  All it takes is the discipline to hold employees accountable and to take action against those who aren’t performing, who aren’t worth the money you’re paying them.

But that’s easier said than done!

Do you know what percentage of your workforce is rated at an average or lower level of performance?  50%? 60%?   If you still grant every employee an annual increase, you won’t be able to differentiate and properly recognize your key performers.  You won’t have enough money.  In that case the reward bar is inevitably lowered to cover the most common performance level.  Instead, why not raise the performance bar and make the tough decisions for those who can’t keep up?

If a manager has $10,000 for annual increases and tries to balance rewarding both high and average performers, the increases won’t be enough to recognize key players.   While the merit spend is calculated on average performance high performers need larger increases to feel recognized and appreciated.  A request to grant more than $10,000 will be denied, so what do most managers do?  They trim the increases of their best performers, in an effort to spread rewards as broadly as possible and keep everyone happy.

Is this effective?

Nope!   High performers will be discouraged and may rethink their future efforts as well as their commitment to your company, but your “Joe Average” will be pleased.  As behavior rewarded is behavior repeated, by using this make-everyone-happy tactic you’ll have encouraged more average performance and less high performance.  Does that sound like your reward strategy?

Okay you say, but if this concept is such common sense, why is the practice of holding employees accountable so seldom used?

The Management Fear Factor

Some managers fear what would happen if they took a tough line on performance = reward.

  • They fear that employees are somehow “owed” annual salary increases.  “We have to give them something.”
  • They fear their ignorance over how to conduct effective performance appraisals.  “Do these forms really measure performance?”
  • They fear alienating  the majority of  average employees (see bullet #1)
  • They fear what would happen if they exercised  the discipline necessary  to manage employees – because they want to be liked.

With a process designed to monitor and weed out the lower performers, and at the same time pay the higher performers well,  over time your new practice would retain more of those you want and rid yourself of those you don’t.  The employee performance bar would rise, fostering a more dynamic work environment that will in turn feed business performance.

You can (must) afford to do this.  Consider the impact of increased performance levels on your bottom line.  Isn’t it worth the initial outlay of money to make that happen?

Be Advised!

The bean counters (Finance) are perennially afraid of spending a dollar to save two — or in this case, spending a dollar to earn three.  They believe that, while the dollar cost is real the suggested gains are “soft”; promises that can’t be guaranteed.

There’s no easy way around this phobia short of direct intervention from the top.  Lacking senior management support compensation practitioners will face a wave of passive resistance, if not outright defiance by managers tying to “help” the average employee.

Providing high performing employees with greater rewards can create a win-win scenario, a greater attraction for talented outsiders, an improved  team atmosphere focused on pushing the company forward — and less inequities to drag and drain the goodwill you’ve established.

Try it.  Spend a dollar and earn four in return!

Assessing Organizational Culture

August 4th, 2015

The Symicor Group believes that bank culture is an essential consideration to would-be employees.  Is your culture congruent with that of your next superstar?

In a recent posting on June 25, 2015 by Stephanie Reyes on tribehr.com, Stephanie hit the nail on the head concerning the importance of whether culture actually matters in the work place.  You can view her posting at  http://tribehr.com/blog/assessing-organizational-culture

As part of our placement process, we at The Symicor Group,  make it a practice of ensuring that our Clients and Candidates are a cultural fit.  To learn more about or processes feel free to email us or give us a call.

 

Writing A Job Description – Inviting and Accurate

March 3rd, 2014

One of the most unenviable tasks of human resource managers is describing the job to prospective applicants. This is especially true if the job is being posted on social media websites. Some HR managers tend to be too creative, so much so, that the real intent is lost leaving the prospective hire confused. Sticking to standard descriptions without being too harsh on demands will certainly ignite interest in readers.

Yet another advantage to using standard words and phrases is that they make the description search engine friendly and therefore are more likely to be ranked on the top. The trick is to use words that are commonly used by job searchers.

1.  Stay with Standard Job Titles

Here are some common job title descriptions you can replace with standard ones: Replace Office Ninja with Administrative Help or Assistant, Deal-maker King with Regional Director for Sales, Magical Man with Human Resource Manager and Brand Trumpet with Social Media Specialists and so on.

2.  Give the Description a Conversational Tone

Generally it is better to keep descriptions at a conversational level though you may be advertising the job on many different media – social or print media for example. It is best not to use jargon. You can avoid using phrases like Job Overview, Job Requirement or demonstrate for example. Instead you can try to use words like “Why not join us?” or “Here is what you will be doing” or “Will be in charge of” and so on. These words will make your description more conversational and is more like to attract attention and response.

3.  Promote your Organization’s Brand Value

Though good salary and perks will attract many talents toward your organization, they are not the only incentives for prospective hires. Candidates like to be associated with well-known brands and if your business owns a popular brand, you can leverage the goodwill it enjoys in the marketplace.

Describe your company vividly but avoid saying things like when it was founded or how the business grew. Instead you can tell the prospective applicant what your organization’s endeavors are and where the business will be heading in couple years from now. This will help the candidate to visualize his participation in the process and how he or she will be able to contribute to the company’s growth.

4.  Tell the Candidate How they can make an Impact

Most candidates will want to know their working environment. If the position gives control over a large workforce, now is the time to tell them in very clear terms without mincing words. If for example the candidate will be controlling a big team or will be responsible for multiplying sales, you can tell that clearly. Say that they candidate will be responsible for multiplying sales upward of 10%, for example.

5.  Make your Descriptions Mobile Friendly

Little we need to remind HR Managers that the percentage of people who use mobile devices and phones is on the rise. If you are using social media websites for attracting talents, chances are your target audience is using it to read your message. It is therefore imperative to make your descriptions friendly toward mobile phones usage.

The Symicor Group stands ready to help in your recruiting needs.  We can help you write job descriptions, assess talent, formulate HR staffing models, develop compensation programs, and most essential, fill important senior level bank vacancies.  For more information give our office a call at (847) 325-5457.

Banking Salary Report – How do you rate?

November 24th, 2012

As they say “knowledge is power”.  Knowing what the average banking positions pay can help you determine how you rank among your peers.  We have taken information supplied by Salary.com created a list of common banking position along with the U.S. average salaries including bonuses, compared to those banking positions in the Chicago area.

                             Position       U.S.  Chicago
Branch Manager I  (Small Bank) $   55,021 $  58,451
Branch Manager II (Medium Bank) $   63,438 $  67,392
Branch Manager III (Large Bank) $   70,598 $  75,000
Chief Credit Officer $ 187,191 $ 199,631
Chief Retail Banking Executive $ 292,706 $ 310,953
Commercial Loan Officer (Sr. Level) $ 104,611 $ 111,132
Commercial Loan Workout Officer (Sr. Level) $ 103,173 $ 109,604
Compliance Coordinator $   46,147 $   49,024
Group Branch Manager III (Sr. Level) $ 129,036 $ 137,080
Head Teller $   32,056 $   34,054
Loan Workout Officer III (Sr. Level) $ 108,861 $ 115,648
Mortgage Closer $   42,820 $   45,489
Mortgage Loan Processor III (Sr. Level) $   45,417 $   48,249
Mortgage Underwriter III (Sr. Level) $   68,057 $   72,300
Private Banker III (Sr. Level) $ 114,999 $ 122,168
Regional Retail Banking President $ 190,179 $ 202,035
Relationship Manager III (Sr. Level, Business) $ 112,716 $ 202,035
SBA Banking Manager $ 138,586 $ 147,226
Teller III (Sr. Level) $   29,103 $   30,922

 

Now that you know some of the average banking salaries, are you happy with your current salary?  Do you enjoy current working environment?  Do you love going to work every day?  If you answered “No” to any of these questions contact The Symicor Group and discuss your situation and your options.  Let one of our banking recruiters (former banking executives) work with you to find that perfect position that matches your unique experience, skills and personality.  Submit your resume today to get things started.

So You Want to be a Bank Branch Manager!

September 18th, 2012

In this short YouTube video a Bank Branch Manager discusses his typical day at work, the qualifications needed for the job, the best and worst parts of the job, as well as advice that can be used by students and others considering this line of work.  Click link below to watch video.

So You Want to be a Bank Branch Manager!

As you can see a Bank Branch Manager does not sit in his office all day crunching numbers, but is out and about working with customers and the community.  If you have a desire to pursue a Banking position such as this, let’s start a dialog to explore your options.  Simply contact The Symicor Group to get started.

5 Characteristics of a Dynamic Loan Processor

September 14th, 2012

Not everyone is cut out to be a mortgage processor. Find out if you or a team member has what it takes to be a dynamic processor.  Check out this article we found in AdvancingWomen.com by clicking the link below.

5 Characteristics of a Dynamic Loan Processor

The banking experts at The Symicor Group are not only available to help you find a loan processor position, but to provide guidance on your career path.  Submit your resume for review today and let our experts provide you some ideas as to which banking positions might be best for you and your career.