Building a Business Case: The ROI of Using an Online Compliance Training Program Courtesy of:
Page 2 The Importance and Necessity of Compliance Training The financial services industry has become over saturated with offerings of compliance training programs in a multitude of formats including custom developed courses, off the shelf programs, onsite training, teleconference, videos, audio tapes/cds and web-based training. As the rate of employee turnover rises, many institutions view these programs as an expensive yet necessary evil that drains resources. But, with increasing customer demands for real time information and better service, coupled with the ever-changing regulatory requirements, it is imperative that institutions invest in a well planned, comprehensive compliance training program. In fact, there are four areas of training that are required by regulators: (1) Bank Secrecy Act (2) Reg CC (3) Information Security (4) Bank Security To ignore training in these areas is not only risky but increases the potential of an institution receiving penalties and fines. A well planned training program also helps to clarify the requirements placed upon financial institutions as federal regulations don t specify the amount or frequency of training that must be conducted. The general requirement calls for the appropriate people to be trained in these regulations and have an understanding of the businesses processes that must be followed. These individuals must not only receive initial training, but also participate in on-going refresher training. The amount and frequency of training required will also vary by the regulation and function of the employee. For instance, a teller may need Reg CC training more frequently than a mortgage processor does. (1) Bank Secrecy Act --- Reg H, Section 208.63 (c)(4) requires training for all appropriate bank personnel in their institution s procedures for monitoring BSA compliance. The examination procedures state: Evaluate the bank s audit and training programs to ensure that the CIP is adequately incorporated. (2) Reg CC --- Training is mandated by Section 229.19(f). It requires banks to establish and maintain procedures designed to ensure and monitor employee compliance with such requirements. Furthermore, examination procedures require that the examiner verify that the institution provides employees with a written copy of the Regulation CC procedures corresponding to their area of responsibility. [229.19(f)(2)] (3) Information Security Guidelines --- Interagency Guidelines Establishing Standards for Safeguarding Customer Information and Rescission of Year 2000 Standards for Safety and Soundness; Final Rule, Section III(C)(2) states: a financial institution's information security program should include a training component designed to implement the institution's information security policies and procedures. The Agencies believe that the appropriate focus for the training should be on compliance with the institution's security program generally and not just on the limited aspects identified in proposed III.C.2. (4) Bank Security --- Reg H, Section 208.61 (c)(1)(iii) states that banks must: Provide for initial and periodic training of officers and employees in their responsibilities under the security program and in proper employee conduct during and after a burglary, robbery, or larceny Other regulations, such as the Gramm-Leach Bliley Privacy of Information Act, the Community Reinvestment Act and fair lending laws, do not specifically identify training as a requirement but will include training programs in the examination procedures. Therefore, institutions must ensure that all
Page 3 compliance topics are covered in their training programs and that these topics are revisited on a regular schedule, keeping risk factors and employee roles in mind. Records must also be kept of all training conducted for the examiners that should include schedules, copies of training materials and verified attendance lists. Technology s Role in Compliance Training Many of the business trends affecting financial institutions also affect decisions made on how to train for compliance. As banks and credit unions grow they struggle to operate disparate systems across branches and contact centers. This can result in customer service disparities between branch networks and leads to a greater need for training along with monitoring and consistent evaluation of employee performance. Too many organizations attempt to dictate a company culture, service levels and compliance processes from the top down without the support of a fully-funded training program to reinforce them. In order to meet these increased demands with reduced cost and decreased risk many institutions are turning to Web-based training programs. Conducting training online can cost 40-60% less than traditional methods of classroom training. In addition, utilizing a Learning Management System (LMS) to help manage the learning process provides automated tools to track employee progress and achievement while providing verifiable records for examiners. Online training programs also make it easier to deliver highly targeted learning opportunities to the right employees at the right time. It has been proven that the interactive method of learning by doing used with e-learning can be as effective, if not more, than traditional methods of imparting knowledge. Comprehension and retention rates can be significantly higher than traditional methods because online training is self-paced to accommodate the preferences, needs and individual learning styles of participants. By combining online methods with traditional classroom and mentoring approaches, a blended training program is established that is interesting to participants and more cost-effective for the institution. This type of program produces well-trained and knowledgeable employees who positively reflect an institution s mission and vision. Access to the training needed to maintain this knowledge and stay current with new regulations will reduce risk, improve performance and improve customer relationships institution-wide. Factors to Consider in Building a Business Case for Online Compliance Training The benefits of online training must be understood in order to build a business case for an e-learning program. By understanding and quantifying direct cost savings and indirect or soft costs, the bottom line reasons to incorporate online components into compliance training programs become apparent. The advantages that elearning offers over alternative training methods that should be taken into account when planning training programs and building the business case are: The cost per person for on-line training may be significantly lower than classroom Online training minimizes travel costs and still meets the needs of a geographically dispersed workforce Online training requires less time away from the job, impacting productivity Utilizing an LMS for administering your training program requires very little employee training or administrative overhead for registering learners, reserving classrooms or updating training records. A consistently applied online training program can also reduce risks while increasing competitiveness with a number of intangible benefits including:
Page 4 Higher employee morale and stronger corporate culture Improved service experience for customers Better company image and reputation Better decision making/problem solving by employees Greater responsiveness to market changes and demands Reduce time to market for rapidly changing environments Helps with seasonal demands by allowing you to train personnel more quickly for productivity Clearly, some of these factors are more easily measured than others. Some paybacks are immediate while others can only be measured over time. However, these represent a realistic set of benefits to help build a business case for online compliance training. Summary Aligning a training strategy with an institution s compliance goals will ensure a defensible business case to get the funding needed for training initiatives. Key executives are looking for high impact solutions to combat the multitude of challenges facing financial institutions. Demonstrating how online compliance training will meet those business needs in a more cost-effective way will convince directors and leadership that training is imperative to the sound growth of the institution. About ATTUS Technologies, Inc. ATTUS Technologies is an industry leader in software and services for regulatory compliance, homeland security and fraud prevention. ATTUS online compliance training solution, Knowledge Bank, provides a comprehensive catalog of courses delivered through an internet-based SCORM and AICC compliant Learning Management System. Knowledge Bank eases the burden of administering a compliance training program and is designed to be more affordable for financial institutions. For more information, visit www.attustech.com or call 888-494-8449.
Page 5 Business Case Template for On-line Compliance Training 1. Describe the Business Need Describe the problem you are trying to solve such as: resource limitations, mandated processes not currently in place, technology issues. 2. Define the Training Objectives Ensure these objectives are stated in specific, clear terms and are measurable, achievable, relevant and have a targeted timeline for achievement. When possible, link with strategic objectives. State them in the following terms: Decreased costs Increased productivity Improved compliance results Decreased training times Greater flexibility Improved processes 3. Describe Potential Options for Meeting the Need This section discusses the best possible ways to meet the need---different on-line options, classroom training, custom curriculum, etc. 4. Develop the Budget Identify both recurring and non-recurring costs. Include items like: Hardware, software and maintenance acquisitions Development activities Facility costs Supporting organizations and support resources Implementation activities Recurring costs On-going fees and costs 5. Calculate the ROI of Options Create a worksheet that quantifies the benefits of each option. Then create a cost benefit summary. Cost savings Learning gains Performance gains Competitive position
Page 6 Cost Savings Example Assumptions: Training 50 employees 5 half day training sessions-classroom (4 hr.) Or 5 on-line courses (2 hr. ea.) Travel 2 hours each way for 50% of employees Cost Factors Classroom Training On-Line Training Wages of Trainees during training ($17/hr, burdened) $ 17,000 $ 8,500 Travel Costs (50% of people traveling) $ 8,500 $ ---------- Trainer/Administrator Wages $ 45,000 $ 7,500* Trainer Travel $ 5,000 $ ---------- Materials/Development Costs (custom training) $ 75,000 $ ---------- On-line Training Library Fee $ --------- $ 15,000 Totals $150,000 $ 31,000 6. Describe the Implementation Outline the process for implementing each alternative with an estimate of time and effort to implement. 7. Define Risks of the Options Describe any risks that could reduce or prevent a successful implementation. 8. Alternatives Analysis Examine different alternatives to select the solution that delivers the greatest value. Briefly summarize the rejected options and describe the impact of not doing the project at all. 9. Make Recommendations Using data from the first eight sections make a recommendation of the best alternative. 10. Executive Summary In one page, give an overview of the solutions considered, the outcome being recommended and the savings/benefits to the company.