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AML/CFT Advisory Services Lending & Credit Risk

Change management in banks and credit unions: A key to success

Bailey Barretto, PMP
October 17, 2023
Read Time: 0 min

Why change management is vital for banks and credit unions

Regulators promote change management to manage risk, but banks and credit unions can also achieve important benefits when they manage change. 

You might also like this 7-step guide to a successful software implementation.

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Takeaway 1

Financial institutions should review change management processes, given the ever-evolving landscape and examiners' attention. 

Takeaway 2

Aside from regulatory attention, another reason to review change management is that it offers several benefits to banks and credit unions.

Takeaway 3

Institutions can not only navigate the challenges of the modern financial landscape but also thrive in it with sound change management processes.

Supervisory priorities

Banking examiners to focus on managing change

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:

  • Leadership
  • Operations
  • 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:

  • M&A
  • System conversions
  • Regulatory requirements
  • The implementation of new, modified, or expanded products and services (such as the use of technological innovations)

Dive deeper into the OCC's supervisory priorities with this podcast:  Ahead of the curve: A banker’s podcast episode 8 – Overview of OCC’s 2024 priorities

Advantages for financial institutions

Benefits of change management

The OCC's spotlight on the importance of change management provides the “stick” that may prompt some financial institutions to assess or revise their practices for managing change. But banks and credit unions can also realize significant benefits when they incorporate change management strategies.

Below are six such advantages.

Why change management helps banks and credit unions:

  1. Enhanced adaptability: Financial institutions are subject to numerous regulatory changes, technological advancements, and market fluctuations. Change management equips these institutions with the tools to adapt swiftly and effectively to these changes, ensuring they stay ahead in the competitive market.
  2. Improved employee morale: Change, if not managed well, can lead to resistance and a drop in employee morale. Change management strategies involve clear communication, training, and support mechanisms, fostering a positive environment where employees feel valued and engaged, even amid change.
  3. Optimized operations: By streamlining processes and implementing best practices, change management optimizes operational efficiency. It identifies inefficiencies, eliminates redundant processes, and encourages the adoption of innovative technologies, resulting in cost savings and improved customer satisfaction.
  4. Risk mitigation: Change, when not managed properly, can introduce risks. Change management methodologies include risk assessment and mitigation strategies, ensuring that potential risks are identified early and necessary actions are taken to minimize their impact.
  5. Customer-centric approach: Understanding and responding to customer needs are fundamental in the financial industry. Change management ensures that changes made within the organization are aligned with customer expectations. This customer-centric approach leads to enhanced customer satisfaction and loyalty.
  6. Strategic alignment: Change management aligns organizational objectives with the changes being implemented. It ensures that every change is in sync with the institution's overall strategy, enabling a cohesive and unified approach towards achieving organizational goals.

Navigate challenges

Banking institutions can thrive amid change

The OCC's emphasis on change management underscores its pivotal role in shaping the future of financial institutions. By embracing change management strategies, these institutions can not only navigate the challenges of the modern financial landscape but also thrive in it. As the industry continues to evolve, change management remains a cornerstone, enabling financial institutions to innovate, adapt, and deliver exceptional value to their stakeholders.

Kick-start change management processes at your financial institution.

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About the Author

Bailey Barretto, PMP

Consultant
Bailey Barretto, PMP, is a Consultant in Abrigo’s Advisory Services, where she works to increase software adoption of clients while boosting ROI and benefit realization to achieve high results. She holds her PMP certification from the Project Management Institute as well as her Change Practitioner Certification from Prosci. Bailey is

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About Abrigo

Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo's platform centralizes the institution's data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth.

Make Big Things Happen.