As banks and credit unions face an ever-evolving landscape that requires adaptability and innovation, they would be wise to take stock of their change management processes. This article describes recent comments by financial regulators about managing change. It also highlights the pivotal role that change management plays in the success of financial institutions.
What do financial institutions need to know about change management?
Change management is a structured approach to transitioning individuals, teams, and organizations from their current state to a desired future state. It is a systematic process that helps manage the complexities of change, ensuring that new initiatives are smoothly implemented, and the desired outcomes are achieved.
For years, banking and credit union examiners have stressed the importance of change management in reducing risk at financial institutions. More recently, the OCC identified change management as one of its supervision priorities for the year ahead. Specifically, examiners are directed to assess how banks are implementing significant changes in the following four areas:
- Risk management frameworks
- Business activities (including the use of third parties to support critical activities).
According to the OCC, examiners should "determine the suitability of governance processes, including acquisition or retention of qualified staff, when the board or management undertakes significant changes" related to: