One Branch Can Sink You

By Ari Karen

If you are on the leadership team of a bank that has dozens, hundreds, or thousands of branches, it can be easy to lose sight of what’s going on in any one branch. The day-to-day operations of each individual branch may not necessarily involve the high level of ethical standards that you employ at the corporate level. When it comes to regulators, though, it does not matter if one of your branches just happens to be a loose cannon or a bad apple. One branch could be all it takes…

In a recent case, the discriminatory practices of a single branch from one bank led to a large settlement. When suspicion was raised that some consumers were receiving higher rates than others, the CFPB sent in secret shoppers. The undercover agents presented themselves as people with the same situations, but some of them were minorities while others were not. After all of the data was collected, it was decided that there was indeed discrimination going on within the bank.

Again, all of this happened at one location. Still, the CFPB found the bank guilty of predatory practices with minorities, and the bank had to pay out a settlement–all because of one single branch. Here’s the point: internal auditing across all locations is extremely important. If you don’t know what’s going on in your individual branches, in effect, you don’t know what’s going on in your company. Behavior in one branch, for better or for worse, can affect the entire organization.