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Banking Policies, Processes &
Re-engineering
Significance of Policies and Processes in Compliance
In businesses, policies and processes reflect their vision, values, culture, and indicate their customer-orientation. Policies and processes are designed to influence and determine all major decisions and actions, so that all activities take place within the boundaries set by them. In businesses, policies and processes reflect their vision, values, culture, and indicate their customer-orientation. Policies and processes are designed to influence and determine all major decisions and actions, so that all activities take place within the boundaries set by them.
- Policies are the guiding principles or predetermined course of actions, which are established to provide a guide toward accepted business strategies and objectives.
- Processes are the specific methods employed to express policies in action in day-to-day operations of the organization. Policies and procedures cannot and should not be designed in isolation or independent of each other; they go hand-in-hand, but are not interchangeable.
- By and large, policies and processes should not be changed frequently. They should be so framed as to provide considerable flexibility to handle unknown emerging situations. This is essential to ensure that operating functionaries, expected to adhere to policies and processes do not get confused with frequent changes.
How Banks are Different from other Businesses
Banks in India, have been highly regulated. Their policies and processes require frequent tinkering, mainly due to regulatory interventions. This is where the most problems of non-compliance and resultant penalties lie. The degree of regulatory interventions has varied from decade to decade as would be seen from the various developments post 1949.
Four decades of highly regulated banking (through a single regulator) until eighties, with very few varying product offerings by banks, was followed by 2 decades of liberalization of the BFSI Sector. This much desired liberalization witnessed emergence of multiple business opportunities, offerings of large number of innovative banking, insurance and capital market products.
Four decades of highly regulated banking (through a single regulator) until eighties, with very few varying product offerings by banks, was followed by 2 decades of liberalization of the BFSI Sector. This much desired liberalization witnessed emergence of multiple business opportunities, offerings of large number of innovative banking, insurance and capital market products.
However, with the increasing risks being faced by the financial sector with the emergence of many a risky products and global war against money laundering activities, the financial sector has once again been experiencing gradual revert to micro-management by plethora of regulator(s) during the current decade.
The impact of liberalization has been subdued by tons of regulations (changing at each drop of a hat) emanating from more than 25 regulators, quasi-regulators, self-regulatory authorities, special purpose entities, etc., most of which emerged during the period of financial sector liberalization, or the current decade.
The impact of liberalization has been subdued by tons of regulations (changing at each drop of a hat) emanating from more than 25 regulators, quasi-regulators, self-regulatory authorities, special purpose entities, etc., most of which emerged during the period of financial sector liberalization, or the current decade.
Given that scenario, for the policies to be effective and promote operational excellence, should the policies and procedures begin and end with regulations?
NO! Certainly not!!
How to ensure that Polices and Processes in Banks do not change frequently?
Organizational ingenuity, values, vision, goals, objectives, unique culture, and the regulations must be finely blended in the bank’s policies and processes to reflect customer-orientation, facilitate growth, profitability and compliance.
Blend Organizational Ingenuity with Policies & Processes
There must be enough built-in flexibility through study and analysis of ‘worst possible anticipated scenarios’ with adequate discretionary powers and strong control & reporting mechanism at appropriate levels to handle emerging regulatory changes, without changing policies and processes.
No doubt, this is not an easy task given a scenario of huge variety of activities, multiplicity of regulators and their instructions, which tend to be quite complex and at times, at opposite ends.
No doubt, this is not an easy task given a scenario of huge variety of activities, multiplicity of regulators and their instructions, which tend to be quite complex and at times, at opposite ends.
Comprehend future scenarios to be ahead of the Curve
Framing policies and processes can take an enormous amount of time and energy, if one is to comprehend future scenarios; deeply understand basic banking; grasp thousands of regulations/statutory provisions; internalize bank’s own values, vision, goals, objectives, and culture; have deep understanding of technological advancements; and possess an ability to blend these into easy to understand policies, with adequate flexibility, and streamlined automated processes, that can increase operating efficiency, productivity, and growth with profitability without compromising on compliance.
Avoid Policy mis-outs
It is absolutely necessary to ensure that there are no policy mis-outs or particular regulatory directives mis-outs, which in fact are quite common in many banks. This happens, as at a particular point in time, banks may not take up a particular business activity. But, when they decide to catch up with the competition, they have no source of readily available related regulatory directives which may have changed from time to time.
How APCORE can facilitate Futuristic Policies & Processes?
Macro Management Consulting vs Micro Management Consulting
Many Management Consultancy Firms excel at Business Process Reengineering at the macro level, which helps most in organization-wide restructuring of business activities, functional division of business activities, and introduction of technology at high level.
But, the realignment of base level basic processes based on frequently modified policies resulting from regulatory interventions, remains a grey area. An expertise in Management Techniques helps very little in micro-level business processes reengineering. Management Techniques need to be blended with base level banking expertise, coupled with deep knowledge of regulatory requirements.
But, the realignment of base level basic processes based on frequently modified policies resulting from regulatory interventions, remains a grey area. An expertise in Management Techniques helps very little in micro-level business processes reengineering. Management Techniques need to be blended with base level banking expertise, coupled with deep knowledge of regulatory requirements.
Firsthand Experience Counts
This is where, APCORE Team of innovative experts with first-hand experience in basic banking, technological acumen, Group Company software development teams, expertise in running the business as leaders, deep understanding of industry best practices, sound knowledge of regulatory and statutory provisions and a huge self-researched (widely used in the banking industry) repository of regulatory/statutory provisions, assists banks in scripting new policies, reviewing existing policies and reengineer/align business processes for seem-less blending, to facilitate easy understanding and implementation at the ground levels, without constraining business growth or breaching regulatory requirements.
Have the Right Focus
The focus of Team APCORE lies on cost-effective compliance without tears. Transaction processing through Core Banking Solutions, is not the only automation that is required in the banking industry. There are hundreds of other surrounding activities, especially as corporate office functions, which need to be fine-tuned and/or automated to facilitate compliance and leave little scope for errors, omissions, or deliberate deviations.
Leverage Technology
While reengineering these processes, team APCORE leverages technology for implementing automated ‘Best Practice Processes’ solutions, rather than automating existing processing with expensive custom-build software solutions, so as to facilitate and ensure regulatory & statutory compliance, and achieve organizational goals and objectives.
