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ALIGNING CREDIT POLICIES AND PROCESSES TO MEET INTENT AND REGULATORY COMPLIANCE

Desired Capabilities

  • Compliance
  • Operational Efficiency
  • Governance and Policy
  • Process Management
  • Risk Management
  • Data and Analytics

The Situation

A Top 30 bank was operating with legacy credit policies and processes for how it originated and serviced consumer loans, credit cards and deposit accounts. Over time, those documents were managed among various process owners and updated to meet changing regulatory standards. The bank needed to ensure the correct policies were in place, related automated and manual underwriting processes were occurring as prescribed, and both intent and execution were compliant. 

The Challenge

Comprehensively review each product’s policies and processes to identify potential regulatory and operational gaps where guidelines and practices didn’t align or meet applicable laws and regulations, while also ensuring extensive manual processes and supporting operational coding worked as intended. 

Meaningful Outcomes

  • Conducted an end-to-end analysis of the bank’s credit policies and processes for consumer loans, credit cards and deposits. 
  • Identified gaps and recommended significant changes, including closure of compliance breaks within written documents or processes, policy revisions to align with correct execution, opportunities for process automation, and modifications to system code where intent and execution didn’t match up. 
  • Created comprehensive rules map, an at-a-glance reference file that details different, compliant applicant paths. 
  • Positioned the bank for compliance with its credit policies and processes. 

Our Approach

Spinnaker started by meeting with the business, implementation and technology teams to understand the current state of credit processes and their supporting documentation, as well as to align across different functional roles and the bank’s governance framework. Working in dedicated workstreams for consumer loans, credit cards and deposits, our team reviewed each document to determine if it was compliant as written and whether it was efficient. 

Next, we determined whether each policy intent drove the proper process execution. We also delved into countless lines of code – which, like the policies themselves, hadn’t been assessed in years – to pick apart execution steps and determine if the bank’s processes were delivering as expected and to identify any systemic issues. 

The team also tracked the applicant experience to understand trigger points for different rules across the underwriting process. Originally facing more than 1,000 rules with up to five variables each, the team rationalized the rules to eliminate those for products and strategies not currently in market, which streamlined that pool to about 400 rules. The team also navigated through complexities associated with multiple products across multiple systems. 

After observing how processes were executed, our team developed recommendations and priority ratings – based on financial, reputational and compliance impacts – on needed policy and process document changes to bring operations into full compliance with regulatory requirements. The team also generated a comprehensive rules map that allows the business to easily see different applicant tracks and trigger actions.