Menu

Article Details

Control Digital Transformation's Regulatory Risks - Lynn Woosley and Ellen Rose


March 27, 2018
Banking Exchange
Lynn Woosley and Ellen Rose

Amid the current digital transformation of the financial services industry, controlling risk should be a fundamental part of banks’ innovation strategies—a point that has been underscored by the Comptroller’s Office.

“Banks are understandably motivated to seek out and implement operational efficiencies and pursue innovations to grow income,” according to an October 2017 OCC bulletin, 2017-43, pointing to the expanded use of artificial intelligence, machine learning, algorithms, and cloud data storage.

“Given the breadth and speed of change, bank management and boards of directors should understand the impact of new activities on banks’ financial performance, strategic planning process, risk profiles, traditional banking models, and ability to remain competitive,” OCC wrote.

The bulletin listed principles it expects banks to follow “to prudently manage the risks associated with offering new, modified, or expanded products and services.”

While many of the concepts that OCC outlines are not new, its bulletin should serve as a clear reminder that the industry’s new activities are no exception to regulatory standards for risk management.

Given the nature of digital technology and fintech partnerships, in fact, risk could be even higher.

Risk and control self-assessments—RCSAs—are a crucial tool for effectively managing risk in new as well as established bank products and services. This article provides a framework for applying RCSAs.

Read the full article in Banking Exchange

Lynn Woosley
Lynn Woosley is an Engagement Director with Treliant Risk Advisors, LLC.  She is a seasoned executive with extensive risk management experience in regulatory compliance, consumer and commercial credit risk, credit and compliance risk modeling, model governance, regulatory change management, acquisition due diligence, and operational risk in both financial services and regulatory environments.
Ellen Rose
Ellen Rose is a Director with Treliant. She is a seasoned financial services professional with executive experience in all facets of commercial and residential mortgage banking. Ellen has over 30 years of industry experience in directing originations, secondary marketing, servicing, support, and vendor activities. With a focus on compliance, she has led large and small projects in situations ranging from mortgage startups to mergers and acquisitions.