July 30 – The Federal Reserve Board has approved a final rule establishing risk-management standards for certain financial market utilities designated as systemically important by the Financial Stability Oversight Council. The final rule also establishes requirements for advance notice of proposed material changes to the rules, procedures or operations of certain designated FMUs. FMUs, such as payment systems, central securities depositories, and central counterparties, provide the infrastructure to clear and settle payments and other financial transactions.
Search Results: Risk-Management
July 20 – The Federal Reserve Board has reaffirmed its long-standing policy of applying relevant international risk-management standards to the Federal Reserve Banks’ Fedwire funds and Fedwire securities services. These services play a critical role in the financial system and in facilitating the safe and efficient settlement of private-sector financial market utilities.
By Michael Scheibach
Nestled in southeastern Kansas, 140 miles due south of Kansas City, Mo., lies the mining town of Weir, Kan., home to 700 or so individuals and, by the way, one of the most progressive banks in the nation when it comes to payments technology: CBW Bank.
Vendor Cloud is a software-as-a-service (SaaS) application that identifies and remediates risks posed by third-party service providers in critical areas. At the heart of Vendor Cloud is the vendor service catalog, a central repository of vendor information, key documentation and related risks. Organizations can capture and maintain critical information for all of their third parties. Put simply, Vendor Cloud helps organizations effectively and efficiently manage the risk, cost and complexity of critical vendors throughout the entire relationship – onboarding, contracts, due diligence, performance monitoring, quality and service level management.
Why Vendor Cloud deserves an Innovative Solutions Award:
- With a single system for vendor-risk information and powerful automation, organizations streamline end-to-end third-party risk management processes for enterprises, vendors and assessors.
- Management-level reporting reduces operational exposures, surprises and losses while ensuring results stand up to regulatory scrutiny.
- Risk managers can create role-specific reports and dashboards through a simple-to-use interface, a level of reporting that manual methods simply cannot provide.
- It is delivered seamlessly via the cloud, allowing financial institutions to outsource IT-heavy functions to a service provider that manages licenses, deployments and upgrades while adhering to SSAE 16 security requirements.
ProfitStars® EPS SmartPay Express™, part of the Enterprise Payment Solutions (EPS) product suite, enables financial institutions to provide custom online payment and donation services for business customers. SmartPay Express processes payments in a hosted environment, managing the security and IT concerns for businesses. The platform provides a custom branded URL address and microsite for each business and supports single or recurring payments from:
- Checking or savings accounts (processed as ACH transactions);
- Credit or debit cards;
- PayPal® accounts; and
- PayNearMe™ cash payments
One of the many ways that SmartPay Express can help community banks become more efficient is by providing the banks’ merchants with a customizable, configurable payments page that works in conjunction with their primary website. It’s an ideal solution for businesses that want to enhance their online revenue streams or increase donations without paying for expensive website modifications.
Because SmartPay Express requires minimal technical setup, it can help both banks and merchants expand their capabilities. It’s perfect for business customers who do not have the IT resources to create an online payments option. ProfitStars also provides a hosted environment to process payments quickly and safely.
SmartPay Express can allow banks to better serve their customers by enabling merchants to choose to take single or recurring payments from checking accounts or credit/debit cards. Users can also take advantage of alternative payment methods such as PayPal or PayNearMe. Additional payment methods will be added to the solution as the payments landscape expands.
In summary, SmartPay Express is a customizable payments site that will fit into a bank’s existing payments strategy with ease. By allowing banks and their customers to set up a site that works best for them, SmartPay Express can serve as an efficient and effective tool that enables both entities to provide the highest level of customer service.
Gladiator® Hosted Network Solutions™ (HNS) is an outsourced IT infrastructure solution that delivers network essentials (servers, storage, network, & operating systems) via JHA’s private cloud. The solution enables financial institutions (FIs) to reap the many cost & efficiency benefits associated with a hosted infrastructure model while leaving the burden of IT mgmt responsibilities to our IT, security, & compliance experts. Further, it allows FIs to repurpose IT resources to focus on more strategic initiatives.
HNS is deserving of an Innovative Solutions Award for delivering the broad range of value & benefits to FIs as follows:
- FFIEC/OCC Oversight, Compliance, & Risk Avoidance
All JHA hosted services are under direct FFIEC oversight. HNS transfers to our experts the risk of disaster avoidance, hardware replacement, & ensuring systems are not compromised.
- The Freedom to Stop Chasing Hardware & Shift IT Focus
FIs find it increasingly difficult to implement & support their in-house IT infrastructures. HNS allows them to get off the ‘revolving technology wheel’ and let Gladiator take on the analysis, implementation, support, & risk of maintaining network hardware.
- Disaster Avoidance (DA)
JHA has implemented one of the most robust DA processes in the industry, and this is the same methodology used for HNS. At least twice a year we transition from two data centers, operating from both sites for at least 45 contiguous days. This redundancy removes the risk of disaster recovery from the FI’s disaster planning equation. This is significant in the eyes of auditors.
- Consumption-Based Services with Dynamic Scaling
HNS uses the consumption model based on the amount of resources being used at any given time. These services are metered, scaling up & down based on the applications being used or retired, delivering huge flexibility for optimal utilization of FI resources.
By Nicholas Graham
Regulators have recently given clarity as to whether or not all banks need an “enterprise risk management” program. The answer is no, not all banks need an ERM program; the decision should be based on each individual bank’s size and complexity. However, regulators have stated that every bank, regardless of size and complexity does need to have a formal individual risk assessment process. Therefore, no matter what name we call the risk-management process, every bank must undergo a formal risk assessment that effectively identifies, measures, monitors and controls risk on an institution-wide basis. The most effective risk-management process for banks continues to be utilizing a CAMELS + approach. There is evidence to support that this approach is the easiest format to adopt, understand and implement. If it is the process your primary regulator follows, why not take the same approach?
Managing risks requires a proactive approach
By Charles Cheatham
A bank’s information security risks include not just regulatory risk, but also financial risk (from unauthorized transactions arising from data breaches), reputation risk (loss of customers’ trust and loss of business), and business continuity risk (system failure, destruction or corruption of data, or unavailability of electronic information because of hackers, disaster, or other business interruptions).
By Kristen Burgess
“Everyone has a plan until they get punched in the mouth.”
This famous quote by heavyweight champion boxer Mike Tyson holds striking relevance to risk management in the present environment. Even some of the most market-savvy, plan-oriented farmers weren’t prepared for the beating that grain prices took in 2014. For those who had the good fortune and insight to lock in forward contracts or hedge some of their grain in the futures markets, the blows haven’t been quite as bad.
By Michael Scheibach
Winston Churchill once said, “It is always wise to look ahead, but difficult to look further than you can see.” Of course, the words of the man who steered Great Britain through the perils of World War II did not portend the current state of the payments industry. But Churchill’s words are quite appropriate for describing the real challenge to grasp where the world of electronic payments is taking the financial services industry.