Banking Operations Best Practices & Strategy

Proven Banking Leading Practices to Adopt

  • Best Practices (#150) / Banking / Retail Branch Operations

    Best Practice (Good)
    Create and distribute FAQ documentation for the common errors that branches/customers submit (by area/product) routinely to ensure accuracy and reduce the rework required to collect/correct documents.
    Typical Practice (Bad)
    Communicate with branch staff and customers on an as-needed basis when document errors are encountered. Frequent cases of missing information or lack of approval drives back office rework.
    Benefits: Reduces occurrences of common document errors from branch staff/customers and cuts down the rework and reconciliation effort related to those errors.
  • Best Practices (#151) / Banking / Retail Branch Operations

    Best Practice (Good)
    Develop and distribute client "interaction guides" that outline common conversations with clients and how to best handle questions and address cross-selling opportunities. Continuously improve these guides and frequently use them as a teller training tool.
    Typical Practice (Bad)
    Reduce or eliminate the use of client "interaction guides" to coach tellers on how to improve client interactions.
    Benefits: Improves overall retail branch customer service levels, teller competency and cross-selling activity.
  • Best Practices (#152) / Banking / Commercial Lending

    Best Practice (Good)
    Document problems encountered by commercial loan processors and provide a formal set of solutions (in the form of an FAQ or training document) for each issue to ensure uniform problem resolution.
    Typical Practice (Bad)
    Train individual specialized commercial loan processors to handle recurring, problematic commercial loan issues so that error resolution is centralized and more tightly controlled.
    Benefits: Formal guidelines to resolve standard, repeat issues decrease cycle time as loan processors do not have to spend time searching for a method to solve the problem.
  • Best Practices (#153) / Banking / Commercial Lending

    Best Practice (Good)
    Ensure that commercial loan officers provide underwriting with a cover letter for each loan application to inform the underwriter of both the positives and negatives about the case.
    Typical Practice (Bad)
    Have commercial loan officers (or agents, sales staff) verbally (or through email) notify underwriters of possible problems for each individual loan application.
    Benefits: Supplying this letter may take an additional 10 minutes, but may save weeks in the underwriting process.
  • Best Practices (#154) / Banking / Consumer Lending

    Best Practice (Good)
    Establish a single point of contact (a loan servicing/support employee) for each borrower, especially those in default or undergoing loan modifications.
    Typical Practice (Bad)
    Allow consumer loan servicing staff to field inquiries and make contact with borrowers on an as-needed basis, without assigning each borrower to a single servicing employee.
    Benefits: Improves overall customer service and loan servicing effectiveness while ensuring that loan servicing employees understand the situation and tendencies of their assigned borrowers.
  • Best Practices (#155) / Banking / Consumer Lending

    Best Practice (Good)
    Use a standardized checklist to conduct a final check for all requirements before shipping out consumer loan submissions, with tie-ins to performance for any applications that are kicked back for correction/clarification.
    Typical Practice (Bad)
    Immediately ship out consumer loan submissions upon completing them without looking them over for errors or missing documentation.
    Benefits: Managerial routines that utilize checklists, error tracking and performance measurements help train loan processing staff and simultaneously improve inbound loan data quality.
  • Best Practices (#156) / Banking / Mortgage Lending

    Best Practice (Good)
    Develop a standard triage process for underwriting incoming mortgage applications. Send simpler files through an automated underwriting system or an entry-level underwriter, while assigning more difficult cases to senior, experienced underwriters.
    Typical Practice (Bad)
    Assign incoming mortgage applications to underwriting staff arbitrarily and allow them to use their experience and judgment to guide them through the underwriting process.
    Benefits: Improves underwriting cycle time and accuracy, and frees up senior underwriting staff to work on more complex, difficult underwriting tasks.
  • Best Practices (#157) / Banking / Mortgage Lending

    Best Practice (Good)
    Mortgage loan origination and sales force employees should spend less than 20% of their time on application data gathering, product servicing and document collection activities. Hire low-level staff to deal solely with those activities.
    Typical Practice (Bad)
    Have loan origination and sales force employees spend around 50% of their time on application data gathering, product servicing and document collection activities. This provides higher levels of accuracy.
    Benefits: Frees up loan origination and sales force employees to focus on more high-value tasks, such as new business development, cross-selling and proactive customer service.
  • Best Practices (#158) / Banking / Wealth Management

    Best Practice (Good)
    Ensure that all account information is collected from the beginning. Any portfolio accounts that are created without all necessary information will be unapproved until all required information is provided. For online forms, all fields should be turned into required fields.
    Typical Practice (Bad)
    Set up portfolios with only the minimum amount of information needed. This leads to rework as portfolio managers will need more information later on and is often seen as a cost of doing business.
    Benefits: The organization will have all necessary information about clients. There will be no need for rework as representatives will not have to collect information that should have been collected when the portfolio was created.
  • Best Practices (#159) / Banking / Wealth Management

    Best Practice (Good)
    Have direct financial advisors to offer consultations on stock purchases, advice on maintaining portfolio balances and investment management advice as a natural extension of the work they already do. This can lead to additional sales opportunities that can increase revenue from each client.
    Typical Practice (Bad)
    Be sure that retail wealth management clients are given less priority than institutional clients. Clients should be able to do much of the trading work themselves without any advice on investment management or how to maintain their portfolio balance.
    Benefits: Clients will receive better financial advice and will start to rely on their financial advisors even more. This will build an extra layer of trust that will lead them to seek advice and additional products for future investments.
  • Best Practices (#160) / Banking / Direct Banking

    Best Practice (Good)
    Create a clear, easily accessible document (log in not required) explaining the online banking security practices of the bank. Outline security guarantees and alerts in plain, customer-centric language and define the actions that will be taken if fraud is detected.
    Typical Practice (Bad)
    Bury online banking security practice documentation in user agreement forms that are typically not read thoroughly by online banking customers during the registration process.
    Benefits: Improves customer confidence and allows potential online banking users to read the bank's security guarantees before registering for online account services.
  • Best Practices (#161) / Banking / Direct Banking

    Best Practice (Good)
    Use an “all hands on deck” approach for periods of increased call volumes (peak hours) in which all available call center agents, support staff, managers, trainers and team leads are available to field incoming calls.
    Typical Practice (Bad)
    During periods of increased call volumes (peak hours), staff additional call center agents or use outsourced agents to handle the increased demands.
    Benefits: Drastically reduces staffing costs, reduces blockage and hold times and improves employee understanding (and overall versatility) of core call center functions.
  • Best Practices (#162) / Banking / Direct Banking

    Best Practice (Good)
    Do not provide lengthy, up-front messages (marketing pitch, web address, company slogan, etc.) to the caller when interacting with the bank's IVR system. The span between the welcome message and the final prompt should not exceed 30 seconds.
    Typical Practice (Bad)
    Give the caller a description of the company, a marketing pitch and provide them with the website address before they get to any substantive audio prompts within the IVR system.
    Benefits: Reduces the amount of abandoned calls, increases the likelihood that calls are resolved within the IVR system, and improves customer service levels by avoiding common frustrations related to IVR prompts.
  • Best Practices (#163) / Banking / Electronic Banking

    Best Practice (Good)
    Develop and distribute a list of common reasons for automated clearing house (ACH) transaction failures (incorrect routing/account number, account restrictions, etc.). Inform processing staff of these common pitfalls and develop web-based forms with these recurring, time-consuming errors in mind.
    Typical Practice (Bad)
    Payment processors are not aware of common ACH processing errors (or the related effort devoted to correcting these errors). Furthermore, online forms created to collect ACH payment processing information are unclear and unfriendly, increasing the likelihood that incorrect information will be submitted.
    Benefits: Reduces the amount of ACH transaction failures, cutting down on the rework and customer frustration related to these common missteps.
  • Best Practices (#164) / Banking / Lockbox Operations

    Best Practice (Good)
    Analyze the location (geographic) of lockboxes periodically (monthly/quarterly/yearly) to ensure that they are positioned strategically around the customer bases of the bank's lockbox customers.
    Typical Practice (Bad)
    Monitor lockbox positions and propose adjustments on an as-needed basis when requested by customers or management.
    Benefits: Ensures that lockboxes are located in close proximity to customers and improves lockbox customer satisfaction by reducing time required to process lockbox payments.
  • Best Practices (#165) / Banking / Lockbox Operations

    Best Practice (Good)
    Immediately scan and post images of checks submitted to lockboxes on a secure online portal that lockbox customers can access at any time.
    Typical Practice (Bad)
    Assemble all checks submitted to the lockbox and send a weekly/monthly statement to lockbox customers after all of the checks have been processed.
    Benefits: Allows lockbox customers to immediately check images of submitted checks and compare them to invoices in the accounting system.
  • Best Practices (#166) / Banking / Merchant Services

    Best Practice (Good)
    Implement specialized procedures and protocols during peak seasons (typically November-January) in order to ensure that payments system operations are not interrupted during times of increased transaction volume.
    Typical Practice (Bad)
    Go about business as usual during peak seasons without making any adjustments to payment gateway/website capacity or product monitoring practices.
    Benefits: Reduces the likelihood of system failure or shut down when transaction volumes spike and improves customer confidence.
  • Best Practices (#167) / Banking / Cash Management

    Best Practice (Good)
    Perform standardized, formal, annual (or even quarterly/bi-annually) reviews of bank account structures, performance levels, account fees and account signers.
    Typical Practice (Bad)
    Perform formal reviews of bank account structures, performance levels, account fees and account signers on an ad hoc basis when prompted by cash management customers.
    Benefits: Ensures that cash management customer liquidity is as centralized as possible and that treasury strategy remains aligned with the company's overall goals and upcoming events. Improves cash management customer satisfaction and retention by taking a proactive role in company treasury strategy.
  • Best Practices (#168) / Banking / Cash Management

    Best Practice (Good)
    Ensure top-down support from leadership for key performance indicators and a centralized web-based system to report standardized information to cash managers.
    Typical Practice (Bad)
    Allow cash forecasting to suffer from non-standard or obsolete data, as well as uneven levels of buy-in from different units in the organization.
    Benefits: Cash managers will be able to accurately estimate the liquidity needs of the organization and reinforce it against sudden disturbances in the market.
  • Best Practices (#169) / Banking / Back Office Operations

    Best Practice (Good)
    Centralize all customer credit/risk checking activities to a single back office group, and standardize communication procedures between that group and other areas to ensure that credit information is accurately communicated.
    Typical Practice (Bad)
    When opening an account, allow multiple back office groups to check the client's risk rating.
    Benefits: Reduces rework and confusion related to credit/risk checking activities and findings related to account opening.
  • Best Practices (#170) / Banking / Back Office Operations

    Best Practice (Good)
    Create standardized communication protocols for the back office when a customer account opening request is rejected. Ensure that all relevant information is communicated to branch employees when a rejection occurs.
    Typical Practice (Bad)
    Keep the communication between the back office and branch staff as nonexistent, or at least to a minimum. Branch staff do not need explanations or reasons for a client account rejection to do their jobs well.
    Benefits: Improves overall customer experience and increases the likelihood that the customer will attempt to open an account at the same branch location after any outlined issues have been addressed.
  • Best Practices (#170) / Banking / Back Office Operations

    Best Practice (Good)
    Create standardized communication protocols for the back office when a customer account opening request is rejected. Ensure that all relevant information is communicated to branch employees when a rejection occurs.
    Typical Practice (Bad)
    Keep the communication between the back office and branch staff as nonexistent, or at least to a minimum. Branch staff do not need explanations or reasons for a client account rejection to do their jobs well.
    Benefits: Improves overall customer experience and increases the likelihood that the customer will attempt to open an account at the same branch location after any outlined issues have been addressed.
  • Best Practices (#171) / Banking / Compliance & Risk Management

    Best Practice (Good)
    Implement standard Know Your Customer (KYC) protocols to assess the amount of due diligence (standard customer due diligence [CDD] or enhanced due diligence [EDD]) required when investigating a particular customer or account.
    Typical Practice (Bad)
    Perform KYC activities based on the type of account that is being opened (standard deposit account, private banking account, etc.) without assessing other risk factors or account updates/behavioral changes.
    Benefits: Performing due diligence activities based solely on account product types can create an unnecessary burden and potentially compromise the effectiveness of AML programs.

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