How banks can better protect themselves from dangerous risks

Headquartered in Boise, Idaho, with five branches in four Pacific Northwest states, Northwest Bank is a relatively small financial institution. And that’s one of the assets its customers value. Along with its account, lending, and credit card offerings, Northwest provides trusted, personalized service to individuals, regional small and medium-sized businesses, and area nonprofit organizations. Its customers aren’t just numbers.

Being small, however, can make it challenging to maintain regulatory compliance and manage various forms of risk. Northwest’s risk management team consists of three hard-working individuals who handle several investigations per month. Like banks of all sizes, Northwest must meet the requirements of the Bank Secrecy Act (BSA), which include conducting rigorous customer due diligence, identifying and investigating suspicious account activity, and performing risk tolerance reviews. This is essential work for protecting both the bank and its customers. It’s also a huge job for a smaller-sized institution.

A couple of years ago, Northwest decided it needed a more efficient and effective way to get that job done.

Seeking a better way

Up to that time, Northwest Bank conducted this work manually, relying primarily on extensive web searches and paper trails. This required sifting through massive amounts of irrelevant or outdated data, which took up a lot of staffers’ valuable time. Even then, risk management team members worried that the information they pulled together wasn’t always as accurate and comprehensive as they needed it to be.

What’s more, Northwest couldn’t keep timely tabs on changes in public records or adverse media concerning higher-risk customers, information that might require the bank to take quick action. These account holders operate in high-risk industries or who do significant business overseas. This monitoring gap could leave the bank vulnerable to transactions involving money laundering or other forms of financial crime.

Like nearly every business, Northwest Bank has become reliant on digital technology. As a result, its risk management team has more and more digital data to sort through. The bank came to realize that managing that data and the risks that go along with it required a digital solution. To make mitigating such risks more effective, Northwest Bank began researching tools and platforms that could quickly gather comprehensive and reliable information.

In 2021, Northwest Bank heard about Thomson Reuters Risk & Fraud Solutions, a suite of tools designed to streamline risk management and fraud detection. One of its key components is CLEAR, Thomson Reuters’ public records investigation technology. Because it instantly accesses, integrates, and analyzes data from a vast collection of public and proprietary data sources, CLEAR provides a holistic view of potential risks, delivering actionable information in minutes, not weeks.

Intrigued by the possibilities but serious about proper due diligence, Northwest Bank put the Thomson Reuters suite to the test. The bank leveraged CLEAR, and other Thomson Reuters risk management tools, which can work together seamlessly to more effectively identify potential risks. This allowed Northwest Bank to put together a comprehensive risk management strategy.

In its “test drive,” Northwest Bank quickly discovered that its investigation times were drastically reduced, from weeks to as little as five minutes. The highly accurate information the Thomson Reuters solutions gathers significantly lowered the risk of errors. With timely and reliable information, the bank could manage risks as proactively as possible. It also could make better-informed decisions about customer onboarding, commercial loan applications, and transaction investigations.

In addition, the Thomson Reuters platform delivered timely alerts and real-time updates on revelations regarding its high-risk customers from sources such as news reports and updated public records entries (which might include incarceration data).

Making risk management less risky

Based on the testing period’s positive results, Northwest chose Thomson Reuters as its technology partner for its risk and fraud management program. Thomson Reuters’ user-friendly design and its training program, including personalized tutorials and ongoing customer support, allowed the bank’s busy risk management staff to quickly become comfortable with the platform and its capabilities.

Using Thomson Reuters Risk & Fraud Solutions, Northwest’s three-person team now conducts five to eight comprehensive investigations per month. The speed with which it can complete these projects leaves team members enough time for more strategic tasks, such as identifying unusual customer transaction patterns. Northwest Bank is now better equipped to remain in compliance with BSA rules and other financial regulations pertaining to fraud and risk.

Some risks are common to every bank; others are specific to a bank’s market and customer base. Whether it’s a smaller bank like Northwest or a larger one with branches across many markets, these trusted institutions need investigative solutions that deliver accurate information regarding potential problems fast—before they become harder to address. Banks of all sizes and in all markets can gain useful and detailed insights into how to more effectively identify, manage, and mitigate their own risks by Northwest Bank’s experience.

Disclaimer

Thomson Reuters is not a consumer reporting agency and none of its services or the data contained therein constitute a ‘consumer report’ as such term is defined in the Federal Fair Credit Reporting Act (FCRA), 15 U.S.C. sec. 1681 et seq. The data provided to you may not be used as a factor in consumer debt collection decisioning, establishing a consumer’s eligibility for credit, insurance, employment, government benefits, or housing, or for any other purpose authorized under the FCRA. By accessing one of our services, you agree not to use the service or data for any purpose authorized under the FCRA or in relation to taking an adverse action relating to a consumer application.