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Common hurdles small banks must overcome to implement effective Case Investigation Management

Effective Case Investigation Strategies

Small banks are often patronized by communities due to their highly personalized products and boutique customer service. But when it comes to issues like financial crime, they’re just as vulnerable as their larger counterparts—or perhaps more so, given their traditional structure. Though every bank has its own set of institutionalized case investigation protocols for anomalous transactions, small banks can struggle to achieve full compliance. Not only does this subject them to more intense reviews from regulatory bodies, but it can also increase their likelihood of falling victim to complex money laundering or fraud activities.

If you’re a decision-maker in a small bank, you should pay close attention to your current anti-money laundering (AML) and anti-fraud capabilities. It should be your goal to strengthen your protocols against financial crime with the same rigor that a bigger bank would. To do so, however, you will likely encounter a few obstacles within your institution’s current systems and culture. Here are the most common hurdles you may have to overcome so that you can improve AML case management within your small bank.

A Lax Approach to the Threat of Financial Crime

The first obstacle that you may face is a company culture that does not take the threat of financial crime that seriously. Perhaps people assume that money laundering and fraud are things that happen only to bigger banks, and not to an institution like yours. A small bank may not be the prime target of a money laundering scheme because, as the saying goes, there are bigger fish to fry.

But this overconfidence and lack of imagination will prove dangerous when the worst actually happens. Any bank that’s too lax about fraud or AML investigation will take longer to recover from financial crime and be slower at improving its systems. No matter how small your institution is, always be on your guard against potential threats and be proactive instead of reactive in your approach.

Related Read: Website and internet security in banking

Lack of Bigger-Picture Perspective When Handling Individual Cases

The second problem you may have to address is a limited perspective on the nature of financial crime. Too often, small banks make their case investigation protocols about resolving individual cases and tagging false positives—and nothing more. Stakeholders may not be trained well enough nor have the commensurate technology to identify related patterns or trends.

To develop excellent case investigation management skills, those in charge of the task must develop a wider perspective. You should be able to identify potential relationships between disparate actions, like multiple attempted withdrawals from one country or out-of-the-ordinary spikes in customers’ banking activities. If you and your staff operate from this perspective—and have the case management solutions to see it through—you’ll have cleared this second hurdle.

Insufficient Knowledge or Capabilities with Data Management

Though case investigation is tedious work by default, some small banks make it even harder on themselves by not investing in better data management capabilities. As a result, staff may spend more hours than necessary combing through data and reviewing the wrong events. If the repository for case data isn’t centralized, it’ll also take twice the effort to come to accurate whole-of-organization conclusions on AML and anti-fraud compliance.

Compliance staff must be able to understand the following:

  • Not every alert deserves the same attention.
  • A centralized data repository will help everyone arrive at accurate conclusions, in much less time.
  • Though upgraded data management solutions seem to cost a lot upfront, they may save the bank a lot of money in the long run.

An Inconducive Workflow for Case Investigation and Resolution

Another factor in your small bank’s effectiveness at case investigation management is your overall workflow for it. There may be an opportunity to improve your workflow, free up time and labor, and become more efficient at compliance duty.

Observe your staff and see which processes they are having the hardest time with. Check, too, if they are responding to cases in a timely manner and allotting an appropriate amount of time to each case. If you can operationalize a better workflow, your bank staff will be as responsive as they should be to any looming threats.

Infrequent Auditing, Monitoring, and Reporting on Case Investigations

Even if you change your workflow or update your current tech stack for compliance, it will be for nothing if you don’t track your progress. Sadly, some small banks neglect the importance of regularly auditing, monitoring, and reporting on their past cases. In the process, the bank may miss out on opportunities to strengthen particular components of their system or respond to alarming patterns on time.

The best AML and anti-fraud compliance systems are the ones that are checked on and fine-tuned on a regular basis. That’s the only way you can accurately compare your past and present AML and anti-fraud performance metrics. If your bank has made a regular habit of analyzing and reporting its compliance data, then you can consider this hurdle cleared.

A Company Culture That’s Hesitant to Innovate

The last and most difficult hurdle you may have to face is a culture that doesn’t want to change its current compliance methods just yet. Put simply, it’s not good for a small bank to cling too tightly to its old ways, because those may become obsolete soon. Take note that money laundering networks and other hotbeds for financial crime are deploying even more complex methods on banks of all sizes. If regulators and other concerned agencies can depend on these to evolve, it should be the same for your bank.

Even small banks should be able to branch out and try innovations to future-proof themselves against the evolving nature of financial crime. Luckily, there are many resources out there and many new methods that they can adapt to prepare for the future.

Conclusion: How Small Banks Can Adapt the Most Effective Case Investigation Strategies

When there’s a will on the part of a bank’s leadership, there’s a way to safeguard the bank from financial crime. Obstacles to achieving full protection may pertain to the existing systems, technologies, or workflow that the small bank has at its disposal. But all in all, the bank’s stakeholders must be proactive—not reactive—in securing their customers’ private data and assets.

Clearing these hurdles will win for your institution the trust of your customers, low costs for compliance, and a shot at expansion. Always strive to think big for a small bank, especially on the issue of compliance.

Read Next: Banks must resolve explainability and “black box” risk governance challenges to succeed with AI post-pandemic

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