Title: Shrinking the Paper Mountain: New Jersey Bank Adopts Recordkeeping Management Systems That Slow the Upward Creep That All Banks Face
Abstract: All bankers have rules or practices that they live by, and one of Norman Beatty's concerns basements. He's a big believer in making sure that any new office his bank builds includes one, terrain permitting. In the case of one new office that couldn't accommodate a basement, he actually added a second story to the blueprints. Why this subterranean fixation? Beatty, chairman, president, and CEO of $282.9 million-assets First Hope Bank, N.A., says he's never seen it fail; no matter how big make a branch, you need more One of the big space eaters, of course, is records storage. Storage continues to be an especially challenging issue for community banks because nearly every banking document involves compliance, legal, administrative, or managerial risks, and rules governing those factors vary at both the federal and state levels. The one feature all documents share is that, when put enough of them together, they take up gobs of space. And then there is the challenge of finding archived documents when they are needed. We'd sometimes spend four to five hours looking for something, says Beatty. Barriers to rapid retrieval ran a gamut from departments' different preferences on filing to decentralized archives to individual bankers' varying appetites for hanging onto all paper they have been associated with. And that's the situation where Beatty found himself a couple of years ago. Despite all those basements, his institution had nearly filled the entire third story of its headquarters building with paper records, and had likewise nearly filled a storage building. There were other problems as well. Staffers were often putting too many types of documents, and too many years' worth, in the most expensive storage containers. We were running out of fireproof cabinets, recalls Susan M. Porter, vice-president and chief administrative officer, and the employee directly responsible for overseeing the bank's revamped archive efforts. And, in spite of the hopes for a paperless future, the amount of trees dying to support banking transactions showed no sign of decreasing. For reasons that will become apparent further on, simply deciding to transfer everything to digital storage in some form wasn't the universal answer, either. Right about this time Beatty attended a meeting of ABA's Community Banker Peer Group Program, which included a field trip to a bank whose trust department had licked the paper dragon. Beatty was so impressed by what he saw that he engaged the same consulting firm that had designed the latter bank's system--King Information Systems, Inc., Norwood, Mass.--to study First Hope's challenge and help it implement a solution. More than a storage problem Early on, Beatty gained a deeper appreciation for the aspects of records management that go beyond simple storage issues. For instance, as important to knowing what to retain, and retaining it in a fashion permitting timely retrieval, is knowing what to toss, and when. Beforehand, disposal was done spasmodically, at best, in our organization, says Beatty. Yet it's an important thing to address, we learned, from a litigation point of view. Retaining years and years of files beyond required holding times not only sucks up valuable square footage, but actually expose a bank to additional potential liability. A subpoena issued in a legal fishing expedition obligate a bank to undergo the expense and time of locating and revealing all relevant files still held. In other words, the more save, the more will have to turn over, and the more material there is with which be attacked. As an example of a risky situation, Edward F. King, chairman of the consultancy, points to files pertaining to rejected loan applications. Keeping any such files for longer than the required 25 months can only help your bank's enemies, says King, who has specialized in bank record-keeping systems for more than 30 years. …
Publication Year: 2004
Publication Date: 2004-10-01
Language: en
Type: article
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