Are you writing Bank Policies and Procedures? Here are 28 Proven Tips!

Last Updated on January 17, 2024 by Owen McGab Enaohwo

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Are you looking for tips on how to write bank policies and procedures? Look no further, here are 28 proven tips that apply to banks and credit unions, let’s begin!

In 2016, one of history’s most significant bank heists marred the reputation of the Bangladesh central bank when hackers stole over $100 million. 

The heist was perpetrated using malware attacks on the money transfer system and SWIFT software to move funds from the bank, which unfortunately lacked the security controls and procedures required to detect and halt the intrusion in time.

Forensic experts believe that the hack was an inside job, where an accessory to the hack with enough access credentials overcame all fraud detection controls.

Well-written policies and procedures for a bank or credit union can help mitigate such risks and streamline performance. However, massive and complex regulatory insights can make this kind of writing a challenge. Here’s a guide that will make it easier for you.

The definition of policies

Policies can be described as high-level principles that clarify the culture of an institution. They are used to shape decisions by providing structure for the firm’s daily activities. A bank or credit union policy can assist the institution when dealing with matters of safety, health, employee accountability, and legal or regulatory adherence.

Excellent company policy will also help to foster fair treatment and employee wellness, ensuring that regulations and laws that govern these matters have been obeyed.

A financial institution can have different types of policies that govern aspects such as:

General policies

• Ethics and code of conduct
  This is a policy that manages personal behavior and oversees business standards, for example enforcing compliance with the Bank Bribery Act.
• Internal controls
  These are put in place to oversee bank operations, financial reporting, and the institution’s risk management systems as well as operating controls.
• Compliance management
  This has all the information required on banking regulations and compliance. It also directs the compliance officer and council on their responsibilities.

Personnel policies

• Human resource
  This is designed to keep the management in the know about what to expect from employees, and vice versa.
• Board of directors
  The board helps to identify and carry out its duties, including budgeting, planning, operations monitoring, and code of conduct.

Deposits policies

• Anti-money laundering and bank secrecy
  This policy provides regulatory agencies’ procedures on exempt persons, customer due diligence, and the identification program.
• Electronic funds transfer act
  This act gives directions on disclosure, and customer liability limitations or error resolution.

Security policies

• Bank security
  This covers all aspects of the institution’s security as a whole.
• Pandemic policy
  It also includes a sample pandemic plan.

Risk management policies

• Email and internet risk management
  Said policy has rules on the best use for the institution’s email and internet facilities.
• Cyber-security
  Designed to direct the staff, officers, and management on how to evade and manage cyber risks.

A well-written policy document will help to protect the rights of the employees and the interests of the institution as well. Not only can policies be used to drive better customer service, but they can also help the credit union or bank achieve its vision and mission and its long term and short term goals as well.

Definition of procedures

Procedures are generically described as a set of thorough instructions that tell readers the best way to perform a task. In banks and credit unions, they list lower-level operations, providing steps that workers must follow to successfully complete a process. They are designed to assist an institution in succeeding and adhering to regulatory and legal requirements. 

A procedure helps employees to rein in human error and consistently complete tasks with success. They will also act as guidelines for newly-employed team members, assisting them to work with the accuracy that veterans have. Toyota, for instance, was able to produce three times as many cars as their Western counterparts through incremental procedural changes in their system from 1948 to the mid-1960s.

The terms policies and procedures are, at times, used interchangeably, but they serve different roles in banks and credit unions. Some sample credit union and banking-oriented procedures include:

Banking procedures

• Foreign check banking
• Security and storage of cash or checks
• Receipt of checks and cash

Credit and debit card procedures

• Regulatory compliance
• Card payment acceptance
• Fraud prevention

Petty cash

• Petty cash usage conditions
• Imprest system for petty cash
• Replenishing petty cash float

While the creation of a policy or procedure for your bank or credit union can take tons of research, a well-written document can go a long way in helping the institution stay compliant and meet all its challenges head-on. To assist you in crafting an excellent policy or procedure, here are some of our best tips:

13 specific tips for writing a policy for a bank or credit union

Pre-writing tips

1) With the assistance of your legal or regulatory team, review the federal and state laws and regulations that should be addressed in the policy.
Banks and credit unions operate under rules governed by regulators. Before writing down your firm’s policy, you need to be aware of any existing policies related to compliance. If you take the time and gather all this information before the actual writing of the policy, you’ll have higher chances of being fully compliant. Note that things change, so your team will need to continually monitor and keep up. There are, for instance, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Federal Reserve, and Consumer Financial Protection Bureau (CFPB) regulations you should keep in mind when writing your own financial institution’s policy.

2) Review the operational and strategic gaps to address in the policy.
Besides the needs required by the regulator, there are additional in-house requirements that should be part of the policy. You should, therefore, review your bank or credit union’s operations, human resources, lending, administration, and legal areas to ensure that all policy needs are fulfilled.
Concentrate on risk areas where audits are expected at first, then move on to other areas such as products and services or personnel whose policies benefit the staff. If you have in-house legal counsel or a policy management office, then you should reach out to them to ensure that you have all the bases covered before writing.

3) Develop your document charter.
A charter is a roadmap outlining what your policy is intended to accomplish. The charter will describe the people you will involve in the creation of the policy, goals, and which employee has authority over which part of the policy. The charter should also outline the life cycle of the policy.
With a charter in place, you will avoid “scope creep” whose final result will be an ever-expanding policy that will eventually ruin your deadline.

Your charter should for example outline:

• The policy writing background
• The purpose of the policy
• What the policy will accomplish
• The scope of the policy-writing process
• The deliverables
• Teams responsible for the writing
• Tasks that should not be expected to be performed as part of the policy writing
• Leadership
• Your budget, assumptions, and risks
• All constraints and dependencies, if any
• Communication game plan to help deal with responses to queries fast
• The authority level of the policy writer and whether they can fire or hire staff

4) Seek your C-level team support.
Present your charter to the firm’s management or stakeholders to ensure that there is no miscommunication. This will go a long way in whipping up support from your CFO, CEO, and Chief Risk Officer or Chief Compliance Officer, the umpires who bear the final responsibility for the new policy document. Consider it also the perfect way to ‘sell’ your policy writing efforts to the C-level team for their approval and support.

5) Identify a policy template or acquire your facility’s custom template.
A policy writing template can be sourced from websites such as bankpolicies.com or bizmanualz.com. Your bank’s policy writing office could also help with the procurement of such templates. Always keep in mind that a template only gives a good launching pad. Fill in any missing information from the information written in your charter. If need be, conduct interviews with the organization, get more facts, and get ready to write a policy that mirrors the philosophies and operations of your financial institution.

 Writing tips

6) Establish an identical writing layout.
Every document that will be part of the policy manual should be laid out in the same manner. If you are going to be writing the policy document as a team, assign one person in the organization to oversee the consistency of the layout. Use a uniform format on all:

• Fonts
• Font sizes
• Headers
• Footers
• Date area
• Page numbering

7) Be very clear and specific in your language.
The language and words used should not be left to an individual employee’s interpretation. If, for instance, regarding the usage of the firm’s internet resources you write that employees should “limit the amount of time spent online as appropriate,” an employee could interpret ‘appropriate’ as three hours online.
To a manager, on the other hand, this may imply half an hour during work hours, which could later be a source of conflict and misunderstanding. The policy should be obvious and directly address the problem at hand in all its variable spheres. You can for example state that the firm’s internet connection is monitored and there should therefore not be any expectations of privacy or any private use whatsoever. To eliminate all vagueness or gray areas, run your written draft past a knowledgeable consultant or the legal team.

8) Define every key term and concept.
Terms such as “assumpsit,” “comaker,” “electronically protected bank data,” “escheat,” or “private consumer data” may not be fully understood by all employees. If you have complex terminology in your policy, define it within the text or make a glossary of terms to ensure that all policy users are properly informed.

9) Write in simple plain English.
A policy with minimum verbiage and legal gobbledygook will assist your bank or credit union workers to read and comply with the document and reduce organizational risks. Avoid distracting technology terms, abbreviations, and acronyms. Keep your writing focused more on the reader than yourself to ensure that your communication is clear and not confusing.

10) Be accurate.
All your facts, regulations, and laws should be accurate, straightforward, trustworthy, and reliable. Adhere also to grammar, style, and punctuation rules to ensure compliance on your side. Make sure the legal team reviews the content.

11) Use brevity.
Finance is complex enough without producing massive, unreadable documents; employees will glaze over while reading them. It is better to write and distribute separate, smaller-sized policy documents for each sector you want to address.

12) Use design aesthetics to enhance the document’s readability.
Do not underestimate how much the proper use of white space can add to the visual impact of your policy. A 15-page document with double spaces that is easy to read is better than a five-page dense policy utilizing tiny fonts. Use headers, subheads in boldface, and icons, and tables plus images appropriately.

15 specific tips for writing a procedure for a bank or credit union

Now that we’re done with the policy, let’s jump into how to write a procedure. Here’s exactly how to do it:

Prewriting tips

1) Gather your team

When writing a procedure – a bank reconciliation process, for instance – chances are high that you are not the person who carries out the said activity. You might have a general idea of what needs to be done, but could be clueless on the small details that, if compounded, can drastically affect the outcome of the process. If, for example, there are uncleared checks listed that have become ongoing reconciliation items, then you should ask the clerk for the information about who contacts the payee before the checks have to be voided.

You cannot write an effective procedure without the input of experts and other employees who hold vital information. The detailed information is often in the hands of the technical staff, stakeholders, incumbent staff, and other frontline employees who utilize the procedure.

If you just dive in without this crucial information, the loopholes in the process might cause it to  be put on the back burner or ignored.

2) Check the procedure’s audit history

It is critical to go through the audit history of the process to ensure that it does not require an update brought on by non-compliance or has caused a safety event.

3) Define the procedure’s scope

The use of a procedure may span many departments, locations, or teams in your institution. If you start to document the procedure without a definition of its scope, you might eventually end up with a complicated process that could be hard to implement.
With a well-defined scope of the procedure, you can divide the processes into smaller bits for use in different teams or departments. In the end, you will have a method broken down into digestible bits for each department or group in the bank.

4) Organize the information gathered

Once you have all the information at hand, edit it to ensure that what you have left is only what the end-user needs to carry out the procedure. Add appendices too for useful non-essential information such as the journal entry binder that will hold the printed monthly bank reconciliation document for an auditor’s quick access.  Use mind maps developed by consultant and author Tony Buzan for better organization. These are fantastic two-dimensional objects that will assist you in taking down your procedure’s processes better. They will help you to recall and review the procedure especially when it is complex in nature.

5) Choose a platform to work with

The platform that you decide to work with to outline your procedure will determine the procedure’s layout, its shelf life before redundancy, and its ease of update. This, therefore, is not a light decision to make. You could, for instance, go old school – paper and pen – or use simple document software such as Office 365. Your bank or credit union could also be willing to pay for advanced process documentation tools such as SweetProcess.
There is, of course, an advantage to using digital means rather than manual pen and paper. Today, only minimal informal procedures can be carried out on paper, because the paper is not only hard to file, find, and store, it is also difficult to update and share outside of one small office.
Most institutional employees are very much at home with Microsoft Word, but the software was not built for processes. If you use it for anything else beyond the text, you will end up with a huge mess. Process management software, on the other hand, is purposely built for such tasks.
The information it creates will be stored in servers for ease of access, security, and decluttering. Fantastic software, specific to the banking industry will, for instance, have the required regulatory information and useful items such as templates. The information it creates will be stored centrally for ease of access, security, and decluttering. Through such platforms employees can print or download procedures when needed. They will also access task lists and detailed instructions conveniently complete with files, videos, images, or form fields if any. You can have these features run as checklists to help record progress too.

6) Have a consistent layout

A consistent layout will make your procedures easy to follow and navigate and also assist in notifying employees of recent updates. You can, for instance, give a variation of a layout to different teams in the institution to differentiate between different department procedures at a glance.
An excellent, consistent style can assist in building your company culture and in forming an identity with the employees. The layout should have regular lists, footnotes, content and cover page, images, font size and font, branding elements, color scheme, and tone. Consistency in the elements creates a sense of cohesion to your procedures.

Writing tips

7) Make a short but engaging introduction

To capture your audiences’ attention, as with any other form of writing, start with a bang.  Speak to your audience about the procedure, who is supposed to carry it out, and why. Where applicable date the process to note the version of the method perchance there will be or have been updated.

8) List every required resource

Like a menu requires an ingredient list, your written procedure also does require a list of resources needed to carry out the process successfully. Include every password, tool, key code, physical terms, and technology required.

9) Write out the steps as simple task lists

Using the layout and platform you have settled on, and all the information gathered from your meetings, list the steps you need to complete the procedure. Break down the process into a menu where every item becomes one clear instruction. Do not go into great detailed write-ups that will lull the employees to sleep.
Instead, ensure that your list helps them see at a glance what they need to know and do to complete a procedure. You can, for instance, have a task list with a sentence for a summary of each task, which is given action labels such as “discuss” or “write.”
Once an employee clicks on a task, a description is there to guide them on the specific steps required to complete it. When writing, use active voice, and start with the first and end with the last action. Follow through on the order of the steps as they appear in the procedure.

10) Include supporting media

Images, videos, graphs, charts, flowcharts, and infographics will help to explain some procedures better than verbose explanations. They will keep the employees engaged better than 30 tasks in full block text.
Long processes might encourage your staff to cut corners just to get things done. But adding creative media files that back up the procedure will help keep them engaged and compliant. If you can show the method in a video or image rather than text through a 40-second screencast, your process will have a better outcome, especially with long, complicated financial tasks that are heavily regulated.

11) Add relevant resources

At the end of the procedure, add appropriate resources that employees can use to improve their skills further if they wish to. These can be useful articles, ebooks, or links to related methods. Adding links to related institutional procedures or compliance documents will assist users in navigating the infrastructure of the banks or credit union better.

12) Avoid ambiguity in writing

Words like “shall” or “may” leave loopholes that can be taken advantage of – doubly dangerous when you’re handling financial assets. Be very specific with your words. Use words such as “must” or “will” to show that an action is mandatory.

13) Include all health and safety information

If the procedure you are writing about is hazardous to the employee’s health or safety, include that in the document. Add all necessary precautions the employees need to take before, during, or after the procedure to ensure that no harm comes to them or the institution.

Post writing tips

14) Check on the accuracy of the procedure

You might, once in a blue moon, write a process that is perfect on the first try, but you discover issues later on. You, therefore, have to test every procedure to determine its accuracy. You can do this by letting the employees perform it in a controlled environment and also by tabling it before the team you had instituted earlier on.

A tried and tested method of verifying accuracy is to allow an employee and one random person with no prior knowledge of the procedure to go through the drafted process. If both of them follow each step successfully, then the method is good to go.

15) Streamline the process

The results from the step above should highlight any actions that take too many resources or too much time to perform. If there are any, replace them or take them out. If there are steps that can be automated, put measures in place to do so.  Make every improvement required before deploying the process.

Reliable, well-written procedures and policies will provide your bank or credit union with a working governance structure. They will also streamline all efforts put in by the human resource end of the institution while increasing efficiency. Use these specific tips mentioned here to take your policy and procedure writing to the next level.

We understand how difficult all this may sound to you. To make the process easier for you, click below to download our guide — How to Mind Map When Writing Policies and Procedures for A Bank or Credit Union.