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Regional Bank Improves Operations and Monitors for Fraud Through Data Analytics

Umpqua Bank is an Oregon-based community bank recognized for its entrepreneurial approach, innovative use of technology and distinctive banking solutions. Umpqua Bank has 150 locations between Napa, California, and Bellevue, Washington, along the Oregon and northern California coast and in central Oregon.

Background

Today’s banks are facing a tougher regulatory environment that forces them to better manage risk, especially risk of fraud. The Chief Auditor at Umpqua Bank was looking for a better tool to monitor the millions of transactions to ensure fraudulent activity did not occur.

Long term, the goal was to have a full continuous monitoring process in place and to have a number of departments outside of internal audit using the tool to monitor activity independently. Umpqua Bank had invested in ACL, a data analysis tool, but encountered roadblocks during implementation including accessing difficult data sources within closed general ledger system and the loss of key data analysis experts within the internal audit group.

The Project

Control Solutions International partnered with Umpqua Bank’s internal audit department to deliver ACL introductory training and later developed a library of data access and analytic template scripts. The ACL training took place approximately six months before the scripting project to allow the internal audit staff time to become comfortable with the product before working with the more technical script templates.

The combined projects included:

  • Training for the internal audit team, to build foundational skills in ACL
  • Creation of automated import and preparation scripts for 44 tables from multiple systems
  • Development of an automated suite of approximately 15 banking-specific analytics targeting both operational and regulatory areas
  • Knowledge transfer and coaching for advanced analytic techniques and script commands

Summary of Results

One of the initial goals was to bring the existing internal audit staff up to a level where they could functionally use ACL well enough to use it without continued outside support and training. The ACL training session followed by the scripting project identified existing technical talent in the audit group. By anchoring the use of product through these “ACL champions”, internal audit was able to build ACL into a company wide, value added audit service, so much so, that other business units were interested enough to request their own copies of ACL and to invest in scripting and training. The internal audit team was even awarded a company wide award for innovation initiatives for the analytic work they were doing using ACL.

The second main goal for Umpqua was to implement a series of scripted data access and fraud analytics. This required working around a number of software and system limitations that made access to the data within the GL system difficult at best. Working together, internal audit, IT, and Control Solutions consultants developed a solution for the setup and connection of the ACL client server software to the GL system data sources.

Importing data from the source systems was automated to simplify refreshing the files that were required by the analytics themselves. Analytic scripts were implemented for approximately 15 fraud and compliance tests using the imported data.

The successes as a result of the scripted analytics fell into three main areas:

  • Time savings that was achieved by automating existing manual processes
  • Results from the fraud analysis
  • Improved monitoring of regulatory compliance

Two of the analytics that were developed involved the automation of a process that was  one manually for identifying any differences in loan details between two bank systems. By automating the process, Umpqua realized a direct savings of 3 full time employees.