Two years after the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law, banks still face increased regulatory scrutiny, and a great deal of uncertainty. As more provisions of Dodd-Frank go into effect, banks are challenged to keep up with compliance requirements, placing even more pressure on IT to support these efforts. How have banks' IT organizations responded to Dodd-Frank-related requirements thus far? Were they sufficiently prepared? And what are some specific tools and technologies that banks are adopting to help them with compliance?
Dodd-Frank is 'Nothing New' for Banks
Geoff Greenwade (pictured to the right), President and CEO, Green Bank (Houston)
Banks know that regulatory requirements for additional programming, procedures and customer notifications are always around the corner; it's nothing new. Regulating agencies generally allow tiered implementation for community banks, so we get the benefit of watching and learning from the larger banks. The intensifying requirements have forced IT managers to change the most -- they must balance scale with more off-the-shelf solutions against requirements and bank objectives.
Third-party data processors have been hustling to get solutions to market to help banks meet Dodd-Frank requirements. It's a big market, and software is expensive -- but competition means we get to choose good products that work across different platforms and business models. In addition, Dodd-Frank made very few changes on the deposit side; it mostly focused on consumer lending. Since Green Bank emphasizes commercial lending, our IT and operations teams sailed through Dodd-Frank compliance by targeting testing, training and implementation and by notifying customers.
Many community banks outsource their IT processes and software development, however. Vendor management and communications often leave banks scrambling for talent. As Dodd-Frank introduces new challenges, community banks' IT organizations need to track more technology methods and mechanisms while continuously learning about new vendors and solutions. They must push that knowledge to the people in the bank who often do not focus on it enough.
Because of organizations such as the Texas Bankers Association (Austin) and the Independent Bankers Association of Texas (Austin), community banks and our IT organizations were ready for Dodd-Frank. The best thing we can do is continue to communicate with each other, share best practices and help each other hone our responses to meet the demands and new requirements that we know will keep coming.
