Risk Communication in Banks

Effective banking communication strengthens the relationship between customer, suppliers, stakeholders, clients, employees and board of directors & improves organizational effectiveness through training, knowledge management, risk management, internal control system and data security management.?

On a daily basis, banks communicate through various communication channels with their customers. These communications are a critical aspect of any bank’s operations because the messages share priorities, provide updates on important issues, and convey an institution’s culture to its customers and communities. Moreover, during periods of economic or social stress and bank operational change, effective communication is necessary to share clear and consistent messages that support the bank and its relationship with its customers. Continuously reviewing such communications play an important role in enhancing customer experience and mitigate regulatory, legal, and reputational risks, thus contributing to business success. Banks can control their communications and manage their messaging by implementing policies and practices around a clearly defined corporate culture.

Identifying various communication channels a bank uses to convey messages to its customers and communities is a useful first step in promoting effective communication. One approach is to first categorize communications, including oral communications, hard-copy documents, and digital media and electronic communications, which include online platforms such as email, social media, the web, and mobile banking. Secondly, a bank may consider whether it uses multiple communication methods for a single customer transaction. For example, loan operations may have separate communications for applications, underwriting, originations, servicing, and collections. Similarly, deposit account operations may have separate communications for onboarding, transaction information, error resolution, and collection functions. In addition, a bank may review whether it communicates with customers, the community, or other business partners through automated systems or third-party vendors. For example, automated and third-party communications could include using interactive voice response systems that intersperse information about bank products between musical selections or the information the bank furnishes to consumer reporting agencies.

Regardless of bank size or complexity, the resulting list of communication methods that a bank uses may be extensive. After communication methods are identified, it may be appropriate to concentrate compliance resources on the types of communications most likely to result in consumer harm or pose the highest risk of not complying with consumer protection laws and regulations. Some banks attribute lower risk to written communications, such as disclosures and notices (e.g., ATM receipts) that have undergone robust compliance reviews. Communications focusing solely on bank name recognition and containing no statements about bank products or services may have lower compliance risk. Bank communications should accurately reflect a bank’s products and services and maintain the appropriate level of privacy. Failures in these areas has the potential to expose a bank to compliance, legal, and reputational risks for violating consumer protection laws and regulations.

After identifying bank communications and assessing the risks they pose, a bank may review high-risk communications as an additional control, for example, to ensure they accurately reflect the bank’s policies and practices. A good starting place may be to evaluate whether the information in those communications is consistent with other written documents, scripts, automated messages, marketing, all types of Internet activity, and recordings. Reviews for consistent communications may also consider the timeframes within which communications are provided to ensure that promotions or other time-sensitive communications were appropriately and consistently handled. It may also be useful to review a sample of internal and third-party service provider (TSP) recordings, emails, and social media communications for consistency.

Banks should communicate information with an appropriate level of security and privacy, consistent with applicable laws and regulations. Privacy requirements cover written and oral communications that may range from email transmissions to conversations in a branch lobby.Consistent with applicable laws, written, electronic, and oral privacy disclosures to customers should accurately reflect a bank’s policy and practices related to the release of nonpublic, personal financial information and data sharing. For example, a teller who orally states the balance remaining in a customer’s account or the amount of funds being withdrawn in a manner that may be clearly overheard by others in the lobby. This could expose the customer’s nonpublic personal information to other customers or potential fraudsters and violate privacy and other consumer protection laws and regulations.

Training a bank’s frontline staff members to ensure they have access to and understand the appropriate bank systems and procedures for providing information to customers is therefore important & useful. For example, bank staff can be trained to avoid providing inconsistent deposit interest rate information to customers because of different internal databases. As another example, administrative staff, loan officers, and underwriters can be trained to provide consistent messages to a customer regarding the status of a loan application regardless of the message source. In addition, staff can be trained to provide consistent information to customers for loan and deposit account transactions, including fees, interest rates, and loan or deposit balances regardless of how customers receive that information from the bank. To avoid compliance pitfalls, staff can be trained in providing accurate and consistent messaging to prevent discrepancies between hard-copy and electronic contracts, disclosures, notices, marketing materials, scripts, chat logs, and staff and TSP oral statements.

Effective communication can also help during an operation’s emergency if a bank must reduce customers’ access to some channels and redirect them to other channels. A natural disaster might make customers more reliant on drive through, telephone, and mobile applications to obtain services. Such unplanned limitations on customer access highlights the importance of contingency planning covering all communication exigencies. Typically, a strong communication compliance strategy clearly identifies who communicates bank messages to customers and the public as well as the types and timing of the messages communicated. In this regard, banks can establish a governance structure defining roles and responsibilities, including who will speak, talk, post, tweet, chat, or email on behalf of the bank.

In conclusion, communication is an important element that determines the profitability and efficiency of a banking organization. A banking organization cannot attract and retain a wide customer base without initiating better and effective communication strategies. Despite these realities, banking organizations maintain poor communication strategies. One of the main reasons is their desire to maximize profits, at the expense of customer satisfaction. A change in this mindset will serve as a key turning point in ensuring that customer satisfaction remains at the forefront going forward.