A Trusted Advisor to Financial Institutions

Upcoming Speaking Engagements

  • July 2020:
    • 22/23: Western Bankers: Director's Conference, Virtual
  • August 2020:
    • 11: Nebraska Bankers: Tech Conference, Virtual




    Winter 2018-19 Newsletter


    Trent Fleming
    Trent Fleming Winter Newsletter
    By Trent Fleming • Issue #10 • View online
    Season’s greetings!
    As we turn over the new year, I wanted to provide you with some thoughts about planning, efficacy, and success in banking. Below, I offer some solutions for avoiding the trap of busyness and some keys for getting things done in your banking strategy.
    The Biggest Threat to Community Banks
    Recently, during the Q&A session after one of my presentations, a banker asked me what I thought the threats were regarding the survival of community banks. Limited time forced me to limit my answer, but it was something like this “the biggest threat to community banks is knowing what to do, but not doing it (well).”
    So I thought I would expand on my answer for this newsletter. Clearly, regulatory compliance is a burden for all banks, but disproportionately so for smaller banks. The prospect of legislation that will roll back some of the more onerous burdens on community banks is exciting, and I hope it will help many more banks stick around for many more years. In my opinion, you will know if it really helps by a noticeable slowdown in bank mergers and acquisitions.
    Properly done, strategic planning sets a vision for the institution, communicates it well to the entire staff, and provides details and prioritization of things that need to get done.
    I enjoy strategic planning more than any other discipline I assist banks with. Properly done, strategic planning sets a vision for the institution, communicates it well to the entire staff, and provides details and prioritization of things that need to get done. Too often, however, great plans result from great meetings, but nothing is ever done. I like to say “for it is plans we have, and execution we lack.”
    For community banks, the clock is ticking. It is more important than ever to know what to do, and to actually do it. There are so many distractions in the course of your day, and I understand that. But if you don’t prioritize, and assign responsibility, you will look up one day and realize you are way behind in the kinds of services your customers and prospects are seeking.
    Focus on things that are mutually beneficial – good for customers, employees, and the bank as a whole. Mobile banking and electronic statements are great examples. Any time a customer can do something for themselves, most of them will choose that path, and they will be more satisfied!
    Here are three things that will make you more successful:
    1. Focus on providing easier ways for customers to do business with you. Embrace the idea that the less time customers spend successfully completing their banking business, the more satisfied and loyal they will be.
    2. Continue to make employees a priority. Knowledgeable and enthusiastic employees are the key to expanding customer utilization of new technologies. Investments in training and education, and insisting that your employees be users of consumer technology, will go a long way toward that goal. Finally, manage your employees well, by establishing job descriptions, managing to those descriptions, and rewarding performance.
    3. Think about your next customer base. It is important to serve your current customers well. But equally important to begin planning for what your next customer base looks like. Aging customers, changing rural and urban demographics, and your expansion plans all play into building a profile of the “next” customers.
    As always, I am here for your strategy, management, and technology assessment needs. Feel free to reach out to me via email (trent@trentfleming.com).
    Upcoming Speaking Engagements
    • December 6 – Missouri Bankers Association, Executive Conference
    • February 2019 – Florida Bankers Association, CyberSecurity Symposium
    • March 2019 – Graduate School of Banking, IT Management School
    • April 2019 – Ohio Bankers League, IT and Operations Conference
    • July 2019 – Advanced Banking School, Penn State University


    Essential Speaking Topics from Trent Fleming



    Essential Speaking Topics from Trent Fleming

    Spring 2019



    CEO/Director Topics

    A Vision for Your Bank
    While the day to day pressures of managing balance sheets and regulatory requirements seem overwhelming, smart banks sense that the weight of competitive pressures make it even more important to develop and execute on strategies that will ensure their banks’ success going forward. this session will look at emerging trends in banking products and services, and provide keen insight into developing the infrastructure, tools, and staff needed to deliver them successfully.


    Directors in a Digital Age

    Increasingly, bank customers, both business and consumer, are choosing electronic delivery channels over traditional branch banking. To support these demands, banks are investing in sophisticated delivery systems to provide real time access for customers. Payment methods ranging from wire transfer, to ACH, to debit cards create the potential for significant fraud loss, and must also be managed to mitigate risk. For businesses, corporate account takeover is a major threat. On the consumer side, card data breaches, and identify theft loom large as sources of loss for banks. This session will help you to understand the risk and exposure presented by today’s on-line environment, and provide guidance in addressing and managing such risks.


    Integrating Technology Into Your Enterprise Strategy

    Historically, banks have had two strategic plans: an enterprise, or business plan, and a separate technology plan.  This is no long a tenable position, as technology now becomes the driving force behind most strategic initiatives.  This session discusses methods of integrating technology planning into your enterprise planning efforts, providing insight to senior managers and executives as to the increasingly visible and important role technology plays in the banking environment.  Topics include selected new technologies, negotiating and managing vendor relationships, merger and acquisition planning, managing operations and technology staff, and engaging with customers to maintain strong relationships via electronic channels. (this session can be tailored for CEO/Director audiences, or Senior Operations staff.  I can also provide this as a Director Education or Planning Session, privately for individual banks)


    CyberSecurity Takes a Seat in the Boardroom

    For two reasons: proper management and regulatory expectations, CyberSecurity and related technology issues must be in front of the board more than ever.  This session takes a look at how to address building the right flow of information to your board from the technical areas of the bank.  A more informed board makes better decisions, and better decisions result in a safer, more secure banking environment.



    Operations and General Topics


    Key Technology Mistakes to Avoid

    The banking trade publications are full of articles today about how banks should change everything, work to innovate alongside “fintech” firms, and otherwise change their business models to focus more on technology and less on banking.  Yet you are still in the banking business.  This session provides a common sense approach for embracing the technology of the future in a structured, strategic way that ensures that your core banking competencies shine through.

    Managing Your Core Vendor Relationships

    Your contract for services with your primary banking software provider defines a very important third party relationship with your bank.  Issues of exposure, liability, service levels, and yes, cost, are all in play. Many banks have signed contracts with dozens of pages, without a careful review.  In some instances, the bank’s attorney has been asked to review and comment on the contract, but absent specific software expertise, such a review may be cursory at best.  This session is not a legal review, but an operational one, of the implications of committing to selected aspects of the contract.  Participants will leave with insight into how to evaluate contract terms, and what areas to ask the bank’s attorney to look into in further detail. These skills can then be extended to other third party contracts, further enhancing the benefits.   Today’s focus on reducing expenses, and controlling costs, makes this session especially timely. Ideal for Operations audiences and CFO Conferences.


    Operational Efficiency Self-Assessment

    Whether recognized or not, productivity – or the lack thereof – continues to impact bank operations.  This session is designed to address key ways that managers can assess and improve the operations of their departments, using techniques that industry experts apply when performing operational efficiency studies.  Key areas to be addressed include staffing, technology utilization, planning efforts, and measurement/reporting issues.  Participants will leave with the tools to evaluate and improve productivity. 

    Introduction to Technology for Lenders

    Technology continues to transform banking.  Traditionally, lending has remained paper intensive, and in some ways has lagged behind other areas of the bank in implementing technology.  Yet, solutions are available to provide a productivity and customer service boost to lending activities.  This session will look at ways that lenders can leverage technology to improve service, reduce costs, and compete effectively at both the consumer and commercial levels.  Participants will leave with solid ideas for selecting, implementing, and managing such technology.


    Alternate Branching Strategies: Leveraging Technology to Efficiently Serve Existing and New Markets

    While community banks offer a wide range of electronic delivery channels, branch footprint remains a key component of service delivery. This session will look at smarter ways to branch, including limiting physical plant investment, and utilizing a wide range of technologies to provide outstanding service across all of your markets.

    Please remember that other topics, including ones that I develop for your group’s needs, are available! 

    Please contact me today to schedule one or more of these presentations for your group!




    Vacations and Succession Planning

    Inevitably, the topic of succession planning arises during strategic planning sessions with my clients. Often, the discussion is focused on executive management and the board.  I submit to you, however, that you should address succession planning across all levels of management, in all departments.
    In a typical organization, there exist what I call “concentrations of knowledge.”    Generally, only a handful of individuals hold a complete understanding of processes, practices, and procedures.  Overcoming the absence of these individuals is generally a collaborative effort of those who have partial knowledge, along with the occasional “emergency” phone call, text, or Facebook message to that person who is on vacation, home sick, or out of the office for a meeting.  The better way to address these concentrations of knowledge is an intentional program of cross-training, succession planning, and overall training and education designed to increase knowledge and understanding of all employees.
    This is my annual reminder to you that vacation season is a great time to assess the extent to which you are impacted by these concentrations of knowledge.   Evaluate the efforts of your staff when managers or other key employees are on vacation.  Do errors increase? Are there compatibility issues that come to the fore? Is the staff reaching out to absent employees for help during the day or in the evening?.  One key to a high performing organization is a level of cross training that anticipates and overcomes the temporary and permanent loss of a key employee. 
    Here are three things you can do to reduce the potential impact of concentrations of knowledge, and prepare for both short and long term absences.  First, insist that departmental policies and procedures are well documented, properly audited (practices versus written procedures) and that employees are trained well.  Second, insist that employees within a given department are cross trained on other tasks and duties, and that actual rotation of duties occurs throughout the year.  Finally, strictly enforce vacation absences, including communications via any method.  This not only pays dividends from improving your bench strength, it ensures that the internal control benefit of required absences is fully realized.

    I’m eager to hear what you learn from your efforts and observations.  As always, I stand ready to assist you in these or other areas. 
    Trent Fleming advises executives on strategy, management, and technology issues.  Reach him at trent@trentfleming.com or on Twitter @techadvisor

    Ready to Give up on Free Checking? Not so fast . . .

    I’m hearing a lot about the demise of free checking in the bank and credit union environment.  Rising costs are cited, among other issues, but I think that consideration has to be given to the profile of customers who have free checking accounts.  If you are doing even rudimentary profitability analysis, you should be able to assess the impact of free checking on customer profitability.  A properly configured account will serve to modify consumer behavior in ways that reduce the costs of servicing the account.  This can be done without fees directed to the consumer.  Increased debit card use, email statements instead of paper, mobile or Internet access (instead of phone calls and voice response systems,) and automatic deposit of payroll or other credits are commonly thought of as components of a successful free checking account. 
    One source I saw recently indicated that rising transaction volumes were a reason for FI’s to eliminate free checking. While per account volumes are rising, the increase is almost entirely attributable to electronic transactions, and these are not increasing your costs.  Debit card activity is eclipsing check writing, and virtually all debit card transactions are not only cheaper than checks, they often generate interchange revenue.  You want customers to use their debit cards, and a properly promoted free checking account will encourage such use.
    If consumer accounts are important to your institution, free checking remains a great way to attract and leverage such relationships.  As always, understanding your costs and revenue opportunities is the basis for configuring and pricing accounts.   I’m available if you want to review and discuss these or other matters.
    Trent Fleming serves as a trusted adviser to financial institutions on matters of technology, strategy, and management, and as an industry speaker. In his advisory role, he has helped hundreds of banks make good decisions about technology from a business perspective. Fleming’s presentations on technology, management, and strategy consistently get the highest marks from his audiences. He serves on the faculty of the Graduate School of Banking at the University of Wisconsin, and regularly contributes articles to industry publications. More information at www.trentfleming.com , trent@trentfleming.com, or @techadvisor on Twitter. 

    Thoughts on Fee Income: Merchant Processing Services

    Virtually every bank I speak to feels the pressure to increase earnings.  In advising banks on such matters, I try to focus on items that are relatively easy to implement, and will generate a stream of earnings with minimal ongoing effort.  Merchant Processing Services fall into this category.  It’s this simple, really: every one of your business customers that accept debit and credit cards (and digital wallet payments) need this service.  Too many banks have the attitude of “we can provide that if they need us to” instead of very intentionally trying to be the primary provider of such services.
    It is exactly this type of thinking that prevents you from collecting all the fee income you should.  Begin now to assess your current program in terms of pricing, functionality, and marketing support.  If it is not what you need to be competitive, look at renegotiating with your current vendor, or evaluate alternate vendors.  Get a program in place that you can be proud to offer.  Then, incorporate this service into all your sales training, calling officer preparation, and marketing materials.  Leverage the relationships you have to sell more Merchant Services to your existing customers, and make the product you offer a selling point for prospective customers as well.
    Properly executed, this plan will generate fee income in two ways: signing bonuses for new accounts, and per transaction fees monthly.  A third benefit is a stronger, more exclusive relationship with your business customer.  These benefits alone should make you invest the time to focus in deploying a Merchant Processing Services program.

    Strategies for Success

    As we move into the new year, I wanted to offer you some ideas for improving your bank that don’t necessarily require new investment in hardware or software.  I trust you will find some of them applicable. 
    It’s hard to read any of the banking trade publications these days without seeing this word. It is in my top 5 overused words for 2015.  For most community banks, innovation can be a challenging word.  You won’t typically develop your own mobile applications, or write software to improve loan operations.  Let me interpret innovation differently then: think of it as improving the way you already use your information technology, like parsing data for a marketing campaign, or creating a new checking account product that appeals to a section of your current (or desired) customer base.  For example, use your report writing capabilities to parse your customers’ payment habits, and learn where they shop most often in your community.  If the businesses you identify aren’t currently customers of your bank, perhaps there is an opportunity to engage them regarding the value of doing business with you.  Again, looking at payment habits, can you identify a group of customers who almost exclusively use their debit card rather than writing checks?  If so, they may be candidates for a streamlined checking account that better reflects their payment habits, and lifestyle.  
    Finally, when thinking about innovation, be sure that you are pushing your software vendors for new products and services in a timely fashion, and for operating parameters (later cut off times for remote deposit or longer operating hours for your non-traditional branches) that allow you to compete effectively in your markets.  Allowing vendors to dictate your operating hours is not an ideal situation. 
    Fee Income Opportunities 
    One failing in our industry has been our consistent approach of giving away virtually everything, to the point that our customers have come to expect it.  As I told one banker a few years ago, “you already have free business checking . . . you just call it ‘we don’t charge for that’”  There are two areas to consider here.  First, improved collection of fees you are already due . . . NSF, OD, loan late charges, research charges.  There’s no reason not to impose such fees unless the bank is at fault for the problem.  Typically you are not.  For fees that are already published, start with your employees.  Help them to understand why we need to collect these fees, and give them training on how to approach customers.  In my experience, employees are often reluctant to impose such fees because of customer reaction.  These employees need guidance, and to be reminded that fee income is part of the bank’s revenue, driving salaries and helping offset overhead costs.  New services present a tremendous opportunity for educating customers that they should expect to pay for value when it is delivered.  “app stores” from Apple and Google have taught consumers to expect to pay in small increments for products that they want.  Leverage this mindset, and impose such fees when you begin to offer new products, including mobile capture, person to person payments, or other enhancements to your electronic delivery channels.  
    Like many of you, I’ve been doing this banking thing for a while.  I’m in my fourth decade.  I always try to look for common concerns and considerations.  One of those remains staffing issues.  I know that I’ve written about this fairly recently, but I believe it is valuable to talk about it again.    Many community banks are overstaffed. (the numbers back me up – banks under 1 billion in assets tend to have 2 times the employees per million in assets that banks over 1 billion have)  At best, they aren’t staffed with the right people.  
    A good bit of this issue is a result of poor HR practices that contribute to a tolerance of mediocre performance.  While I am not an HR expert, I know this for sure: it is impossible to fairly evaluate an employee’s performance if you have not established clear expectations for them.   
    Most managers dread annual performance reviews.  As a result, such reviews are often late, done poorly, and contribute to an employee morale issue.  But if the manager builds a good job description, clearly communicates it to each employee, and uses that document as a means of continually evaluating employee performance, the task becomes easier.  Coaching events – positive and negative – are dealt with in a timely fashion, properly documented, and when annual review times comes around, both the manager and the employee will have a good idea of what to expect.  A much better situation than a hastily done performance review that leaves both parties with a bad taste in their mouth. 
    Improving your managers engagement with their employees as it relates to performance reviews is a key first step in better management.  I believe just implementing these basic steps will go a long way toward improving both employee productivity and morale.  
    As always, I stand ready to assist you with these or other matters.  Please reach out to me anytime. 
    Upcoming and Recent Speaking Engagements
    19-20: Kentucky Bankers Association Payments Symposium, Louisville
    21: Private Event: Industry Update
    8: Ohio Bankers League: Technology Conference, Columbus
    18: Graduate School of Banking: IT Management School, UW-Madison, 
    3: Ohio Bankers League: CEO Conference, Columbus
    4: Southern Financial Exchange: Annual Conference, Memphis
    11 Maine Bankers Association: Directors Forum Augusta
    22 Florida Bankers Association: CyberSecurity Conference, Orlando
    Trent’s Comments is published six times each year and provides insight into strategic topics facing financial institution executives. Please feel free to share this with your staff and colleagues. 
    Should you not wish to receive this newsletter, simply send me an email and I will remove you. 

    Four Ways Executives Can Take Control of Technology

    For many executives, technology is an increasingly complex and frustrating part of running a business.  Two things are certain, though: 
    > Customers increasingly desire to interact via electronic channels
    > There are significant impacts on your productivity and profitability if technology is properly managed.  
    Here are some thoughts to help non-technical executives manage technology well.
    First, manage your people well.  Clear job descriptions and regular performance reviews are the key to setting expectations and monitoring performance.  Remember: it is impossible to fairly evaluate someone’s performance if you haven’t clearly set out your expectations.  While “tekkies” are a bit different to manage, starting with the fundamentals will build a great foundation.  All staff must clearly understand the business you are in, and what is needed from technology in order to achieve your goals.  Solid HR fundamentals will help you communicate that.
    Second, incorporate technology into your enterprise strategic plan.  For many CEOs, strategic planning for technology is an afterthought or a dreaded task.  Moving discussions of technology into your enterprise strategic planning will help you to leverage technology, by embracing its value and clearly defining how technology will support your business lines, both customer facing and internal.  Transparency about the strategic goals of your organization will help your technology managers to support those goals.
    Third, demand a business focus from your staff.  Work to help them understand that technology without a clearly defined business purpose is of little value.  A simple business case document can be a great teaching tool to help your staff communicate the benefits of technology they propose to invest in.  Tying these efforts back to the clearly communicated strategic plan will pay great benefits in terms of having your team focused on the things that are important to you.  Keep it simple.  Insist that your IT staff communicate in plain language.  Challenge them to explain the workings and impacts of their systems in practical terms, rather than relying on buzzwords.
    Finally, keep it safe.  Insist on a security and business continuity focus.  Efforts by criminals to gain access to your company’s data (and that of your customers) are never-ending.  Your security efforts must keep pace.  Place an emphasis on contingency planning and disaster recovery.  Your ability to preserve and/or recover internal operations and customer facing systems is critical to the success of your business.  Insist on written and tested plans that address the three main components of such planning:  prevention, impact minimization, and expedited recovery.  Businesses that suffer technology outages of three days or more are at risk of failure.  It is that important.
    Instead of shirking from technology, embrace it, and seek to actively manage it for the benefit of your employees, customers, and stakeholders.
    Trent Fleming advises executives on management and strategy issues.  He can be reached at trent@trentfleming.com or on Twitter @techadvisor

    Growing Commercial Business for the Community Bank

    Growing Commercial Business
    Trent Fleming, CEO, Trent Fleming Consulting
    The battle in financial services is for the profitable small business.  Business customers are important for three primary reasons, in my estimation:
                                1)     They provide a dependable, low cost source of funds
                                2)     They are willing to pay fees when you can demonstrate value
                                3)     Many are closely or privately held, and provide access to other businesses with common ownership, as well as wealth management opportunities.
    Banking options for businesses are often labeled as Treasury Management or Corporate Cash Management. The name is not important, but the concept is: acquire, promote, and support the banking products and services that your businesses need.
    In order to to compete for business banking with regional and national banks,  community banks have to be effective on two fronts: products and perceptions. 
    Products are easy.  Virtually any of the core vendor solutions available today support the commercial cash management solutions that your business customers will need.  You may have to acquire some ancillary solutions to address particular needs, but my point is this: you have access to these technologies.  Offering these products and services as bundled solutions for customers of various size and industry specialization is a key to building stronger relationships. 
    Perceptions are hard.  Unless you are aggressively meeting with current and prospective business accounts, to promote your offerings, you are falling victim to other banks’ marketing efforts that seek to discredit you.  Larger banks have traditionally done a better job of promoting services to business as a comprehensive set of products and services designed to help businesses get their banking done efficiently.  While there are some exceptions, in very large or highly specialized situations, for the most part, community banks have access to all the business account services that larger banks do, and are simply out-marketed.  Build your story and tell it regularly.

    My presentation Packaging and Promoting Bank Services has been very popular with audiences recently.  I believe I strike a nerve around the importance of formalizing bundles of services for businesses of different sizes or in different industries, and presenting these bundles as solutions for the business.  Doing this says a lot to customers and prospects about the bank’s interest in providing viable solutions.
    So, how do you get started?  First, decide that business customers are important to your bank.  While you may maintain a retail or mortgage lending focus, you still need business customers, for the reasons outlined above.  Second, assess the extent to which your business customers are using your services now.  The list is virtually endless, but here’s a start:
                                1)     Business Internet Banking                                         
                                2)     Bill Pay
                                3)     ACH Origination
                                4)     Remote Deposit Capture
                                5)     Sweep Accounting
                                6)     Interest Bearing Options
                                7)     Lending Products
                                8)     Merchant Services
                                9)     Business Debit and Credit Card solutions
    Third, look for gaps: both in under-utilization of things you already offer, and in your failure to offer products and services required to compete in your market.  Fourth, begin assembling these products into categories.  A very small business, with limited needs, may only need basic business Internet to manage their accounts, transfer funds, and pay bills.  Business with a larger staff may have a need for ACH origination for payroll, and billing, and perhaps RDC if they receive a high volume of checks.  You get the idea.  The intent is to develop suggested bundles of solutions that you can then present to businesses in order to suggest solutions.  Don’t over-think this.  The important thing is to get started. 
    Once you have basic info about what customers are using today, and have assessed the gaps mentioned above, it’s time to get moving.  Meeting with your officers with commercial account responsibility and discussing these findings is a good start. 
    You’ll also want to meet with your business customers:
    Hold meetings with customers, in groups, or at their offices, to introduce the current state of banking technology, and get their feedback. Listening is critical . . . such a meeting should only be 25-30% presentation, the rest should be discussion and listening. In a relaxed environment, customers will open up and discuss pain points (which may not be directly related to the topics you introduced)

    This is how you will learn what your customers really need and how you can best help them.

    As you begin to execute your plan, there’s no doubt that you will have relatively immediate success with some of your existing accounts strengthening those relationships by better promoting your products and services.  Leverage that into testimonial ads, and continue mining your own customer base, while aggressively looking for new business accounts that seem to fit the profile of businesses you are effectively serving.

    What I want to do is help you to change the way you approach business banking.  For the better, and for the long run.  Perhaps these thoughts will get you moving in that direction.  As always, I’m available to assist should you have questions or need some outside guidance. 

    Trent Fleming advises executives on management and strategy issues.  He can be reached at trent@trentfleming.com or on twitter @techadvisor

    Business Continuity Planning Thoughts

    It has been a while since I talked about business continuity planning.  Remember that effective contingency planning involves three components: prevention, mitigation, and recovery. Prevention, including preparedness, is critically important.  While there are events that you have no control over, there are many that you can prevent (such as investing in redundant computer hardware) or minimize (by anticipating and preparing for obvious scenarios)

    We’re approaching the peak of the hurricane season, and winter – with its ice storms and blizzards – is not far behind.  Severe weather can impact utilities, transportation and other services.  Now is the time to assess preparedness at four levels . . . your organization, your employees, your suppliers, and your customers.

    Prolonged utility outages can quickly create urgent situations.  Your business has to address continuation of services at some minimal level.  An important part of that continuation is ensuring that staff is available.  When your employees are prepared, and thus less concerned about the basic needs of their families, they are more likely to be available for work.  Depending on the extent to which your business may be affected, you may choose to invest in generators to be able to operate at least some of your facilities “off the grid.”  Other key areas include identifying the minimal level of service you expect to offer, as well as which locations might be the most important to reopen.

    Preparation for retail customers and employees is similar.  Basic needs, including plenty of non-perishable foods, lots of drinking water, and other key supplies should be stockpiled before a disaster, as they will be hard to find once something has happened.  I’m a firm believer that your business can shine in the eyes of customers and employees by encouraging and facilitating this level of preparation through education and cooperation with local emergency preparedness agencies.  www.ready.govremains a great source of information. 

    When customers of your business are also businesses, you must consider, in your continuation and recovery efforts, how to help them continue.  Again, education and preparation are key.  Many non-regulated businesses have no plans at all for recovery from a disaster.  Anything you can do to improve their chances of survival will pay dividends later.

    Suppliers, much like commercial customers, employees, and retail customers, must factor into your planning and preparation.  Depending on the nature of your business, access to raw materials, outsourced processing services, or other resources may be critical.
    Remember that the goal of all business continuity planning is to quickly recover your ability to serve your customers when something happens.

    Clearly, I’ve just scratched the surface, but my main goal is to get you thinking about being prepared – instead of waiting for something to happen.  I’ll have more updates in the coming days. If you’d like to discuss your particular situation, please contact me.

    Managing Deposit Account Liabilities
    In this issue, I want to point out some potential liabilities if your staff fails to properly handle routine tasks.  I recently learned about a case involving employee theft from a business. This was a classic case, whereby a “trusted employee” leveraged his autonomy in the bookkeeping arena to steal, and cover his tracks.  Discovery was delayed by well over a year, and then, as is often the case, only by accident did the owner realize what was done.  The business, of course, claims that the bank should have found the fraud, and stopped it.  The bank, in like fashion, feels, and frankly has the strength of the UCC (article 4-406) behind it, that discovery should have come more quickly, that the business owner was effectively complicit by not providing proper oversight.  It will be interesting to watch. It is noteworthy that the employee actually went to the trouble (and thus had ample opportunity) to alter the images of checks written to himself once the statements arrived.  Also noteworthy: the bank was unable to provide proper signature cards, corporate resolutions, and in some cases, images of the backs of checks (instrumental in clearly understanding what the checks were actually used for).   At issue here is whether the courts will find that the bank’s failure to maintain good records creates any liability for them in what is otherwise a pretty clear case.
     Also in recent days, a court has rendered a verdict in favor of a financial institution in a case regarding loss over a wire transfer transaction.  Here, the business had actually “refused” the bank’s offer of dual control technology, requiring that one person submit a wire, and another approve it.  To the bank’s credit, all of this was documented, including a letter from the customer declining the dual control methods.  When the business experienced a loss, via an unauthorized wire transfer, they still looked to the bank for restitution.  The court denied it.

    Here’s the link to the article:
    This led me consider how diligent your staff might be in ensuring that account records and documents, such as signature cards, corporate resolutions, faxed requests for wire transfers, etc, are complete and properly maintained.  It would be a good time to re-evaluate your bank’s policies and procedures – and your training – around this area.  We all know that attention to detail suffers over time, unless the important of those details are re-iterated.  
    Here are some key issues to consider
    > Retention of Paid Checks.  Refer to your state’s guidelines for record retention, but generally there is a requirement that you retain the source document, or a legible copy, for seven years after posting.  This includes legible copies of the front and back of each item.  In addition to the retention period, note the term legible.  Be sure that your check imaging system is identifying, and thus allowing you to return, any items that are not sufficiently readable to meet the IQA (Image Quality) standard. 
    > Complete Signature Cards.  Often, the practice of opening a new account involves obtaining signatures over a period of time.  While this might seem understandable, especially for a larger organization that may have multiple authorized signers, it is not good banking practice.  In general, you should not begin servicing the account for which these signature cards are intended, without completely and properly filled out signature cards.  Make a trip to the business, and have management present to you each individual that will be a signatory.  Obtain and document proper ID for each.  Even on consumer accounts, resist the urge to let one spouse sign, and take the card home for the other to sign.  If you begin servicing the account without the necessary documentation, you take away your leverage for getting that documentation.
    > Complete, Detailed Corporate Resolutions.  For any business concern, you should, in addition to signature cards, prepare and have signed a corporate resolution.  This should set forth the terms and conditions of the agreement, including services to be rendered, references to fee schedules, and expectations of performance for both parties.  In today’s world, references to once unheard of issues like Internet Security and Virus protection, enforced dual control of access and access codes, and the like, should be in your corporate resolution.  
    When adding new products and services like cash management, ACH Origination, or remote deposit capture, prepare and execute addenda that detail the terms and conditions of using those services.
    > Electronic Solutions.  As referenced above, these must be appropriately deployed . . . and properly utilized by customers.  Dual control, separation of duties, proper Internet security are all matters that must be agreed to.  Rather than dictating operating practices too closely, be sure that you give broad guidance, and then assess compliance.  Banks must be careful not to exert “management control” particularly if there is a lending relationship, but can certainly give good guidance.  You can also (this is difficult to think about, but becoming a reality) turn off access to all or part of your electronic solutions if you feel a customer is a risk.  This would include customers without proper Internet Security and Virus Protection on their own networks, or those who refuse to utilize the security measures your system provides. 
    >  Bank Controls Over Internet Activity.  The software that drives your commercial banking solutions includes parameters by which you can monitor and manage the risk associated with such systems.  Examples include, but are not limited to, the number of ACH origination transactions, average daily deposit limits, and wire transfer dollar amounts and frequency.  Leveraging data you have from processing your customer’s accounts, and working with customers to understand their legitimate business practices, you can build in these controls in such a way that you protect both your customer’s and your bank’s interests.
     I hope you will share this article with your staff, and in so doing, begin a process of inspecting current practices to realign them with your polices, and reduce your risks. Remember that the most successful organizations are those who identify best practices, and strive, through training and education, to execute on them well.  Should you need help in these areas, I am always available.
    Remember that I am not an attorney, and the above should be construed as operational, not legal, advice.  Please involve your counsel in any decisions involving proper interpretation of rules, regulations, and laws.