Imagine this: Digital transformation is improving regulatory exams …

What if credit union examiners could do most – or all – of their “field” work remotely, from their home offices? No, really, think about it. You might even envision John Lennon in the background, singing “Imagine all the examiners … living life at home.”  But we don’t need to listen to Lennon or other members of the Fab Four to improve processes like credit union exams. All we need is a little creative thinking – and a little help from digital technology.

Why should credit unions care if examiners can do their work and still make it to the kids’ evening soccer games? Because if they work from home, they aren’t in your offices, interrupting meetings or asking for more information.

This isn’t to diminish the importance of credit union exams; as a former CFO, I fully support periodic reviews to ensure safety and soundness, as well as compliance with applicable rules. I know firsthand that most examiners are hard-working, time-conscious people who want to do their jobs well. But let’s face it; they always show up at the worst times and they’re under feet as you try to run daily operations. Having NCUA or state examiners on site is time-consuming, disruptive and expensive … with the credit union paying the bill.

A view from “their” side

A credit union review usually takes 2-4 weeks, so examiners typically are on the road more than 300 days a year. And even in today’s “portable” environment, they still have to schlep around luggage and laptops, while also making sure they brought the right files and can keep them secure.

Examiners who are constantly away from home often miss big family events like children’s school plays and anniversary dinners. When personal life always takes a backseat to job responsibilities, it causes stress and more than a little grumpiness – not a good thing for examiners or the credit unions they supervise. Recruiters say it’s getting harder to attract quality financial professionals who are willing to spend the bulk of their time traveling – especially millennials, who make up the lion’s share of the workforce.

I doubt if many would turn down the chance to do most of their work remotely if they could. That’s about to change because over the past couple of years, Virtual StrongBox has been working with a number of state regulators to help improve their operations through digital transformation.

A (mini) case in point

Problem: One State Department of Financial Institutions needed to improve a legacy exam process and knew it would require digitally transforming its operations. With nearly 150 institutions to supervise and each annual exam taking several weeks, employees were on the road up to 80% of the time. Further, like most examiners, they were spending much of their onsite time requesting documents, reviewing them and writing reports – tasks that don’t require an in-person presence. The State DFI was eager to cut costs, save time and lessen travel demands on its staff. It also was concerned about employee retention and the ability to recruit qualified financial professionals. But to work remotely, the regulator needed a way to quickly receive credit union files while maintaining high security.

Solution: Working with Virtual StrongBox, the DFI began using our secure document storage and file-exchange platform. Examiners assign online “safe-deposit boxes” to each institution they supervise, and credit union personnel place needed documents into relevant folders, such as ALM/Liquidity, Information Security and Technology, Lending, Savings and Administration. Examiners can instantly retrieve needed documents or store them for review as needed.

Results: The DFI has seen costs go down – saving hundreds of thousands of dollars a year in examiner expenses. Also, using secure file exchange has eliminated the need for emails or faxes, which aren’t adequately secure for sensitive financial information. And onsite exam time has been shortened in most cases to a one-day, in person (or virtual) exit meeting. Finally, with a more reasonable travel schedule, the regulator is attracting and retaining top-quality staff.

Imagining a better way

For credit union examiners, digital transformation is solving a problem that has plagued NCUA and other regulators for decades. And regulatory agencies are finding a cohesive, enterprise-wide digital plan allows them to take a measured approach to transforming their operations, one initiative at a time.

It’s time for financial institutions to envision their own benefits from digital transformation. Not only can you improve member experience and retention, but you also can increase operational efficiency and reduce costs. In its study, “Finding Your Digital Sweet Spot,” McKinsey found that among 10 major industries, including retail banking, focusing member interactions in digital channels and automating back-office processes cut the total cost base by more than 9%, resulting in average bottom-line growth of 36% – no matter what the industry is. And credit unions’ cost savings were on the high end, averaging 20%.

But technology alone can’t drive transformation; it requires commitment from the top, strong leadership and strategies for redesigning how credit unions do business. Download Virtual StrongBox’s white paper, 5 Reasons You Need to Be a Digital Transformation Advocate in 2017, to learn more.