Bank Regulation Compliance Using Paperless Document Management
At eFileCabinet, we work with thousands of clients in the banking industry who are concerned about protecting customer information for compliance reasons, besides the fact that taking care of customer information gives them peace of mind and confidence in the bank or credit union.
How can banks increase regulatory compliance by going paperless? Let’s walk through the reasons a banking institution benefits from implementing a paperless document management strategy.
Bank Audits Are Common and Can Be Stressful
If you’ve worked for a bank or a credit union for more than just a few months, chances are you’ve been through an audit. Audits come in two sizes; internal audits and external (government agency) audits. Internal audits are more common and more preferred by employees. They are essentially less-expensive practice runs for external audits. For those lucky enough to be caught in an external audit, the stress alone is often enough to make them reconsider their career path.
While internal audits usually carry reprimands, additional training, and consequences doled out by the employer, external audits carry many more severe repercussions. These include heavy fines for the offending bank, likelihood of discipline or even termination of one or more employees, possible sanctions of the bank, and reputation risk. In 2013 alone, more than 60 million dollars in fines were levied against US banks for non-compliance with FINRA, the governing body for financial institutions. Many of the regulations made by FINRA, the SEC and other financial regulators focus on handling customer information, which is typically stored in bank-controlled documents. Securing private customer information is at the top of the list of priorities for the regulating authorities in the banking industry.
Using Paper for Document Retention Can Be Risky
It is common knowledge that in a paper environment, 100% compliance 100% of the time is impossible. Most institutions train employees and hope that for the few days the auditor visits, that the employee can remember to lock the screen on their workstations, keep the filing cabinets locked during the day (and not just at night), and immediately shred or lock up paper when they step away from their desks. Yet, all too often this does not happen.
The Paperless Alternative for Banking Institutions
The best way for a bank to lock down their documents is to store them virtually by implementing a paperless solution. By converting from a physical filing cabinet to an electronic one, employees can maintain a lock on the filing cabinet. Paper does not get left unattended on the desk, allowing for potential compromise of sensitive information, and documents are locked down from employee snooping. Using a paperless system, access to the sensitive financial data of customers is granted based on job/role function and can be restricted to a need to know basis. This secures data from internal and external risk. As compliance breaches continue to merit hefty fines for banks, many of them are scrambling to find paperless record-keeping alternatives that are easy to implement.
If you find yourself or your banking institution in the market for a secure document management system, may we introduce eFileCabinet?
How Does eFileCabinet Help Banks with Compliance?
A main player in document management, eFileCabinet incorporates these and many more compliance tools into their software. eFileCabinet has options of storing your customer data using an on premise server, or you can choose our Cloud-based document storage solution. Both platforms encrypt all data stored in the virtual filing cabinets using industry-best 256-bit encryption, surpassing in security over half of all US banks website encryption levels. In other words, the data is very secure. Role-based access, automated retention, and audit trails are additional tools that make compliance more feasible and likely, removing the stress that might otherwise be caused by an auditor’s visit.