Every bank wants to excel in managing risk and compliance, no matter what its size. However, the ground realities of a nationwide bank are very different from mid-size banks that serve a smaller community. The difference isn’t just in the number of branches, assets, number of customers, or transactions – there is also a major difference in the nature of both. That is why, when we look for a solution to risk and compliance woes, it is important to understand the context of mid-sized and smaller banks.

There are multiple types of risk and compliance strategies and technologies available. Selecting the strategy and technology to implement that can provide the best ROI requires an understanding of what sets small to mid-sized banks and smaller banks apart from their nationwide major counterparts.

Budgetary Constraints

The most obvious point of difference between large banks and mid-size banks is that the budget they have available for a solution implementation is vastly different. Larger banks can afford to spend millions of dollars every year on risk and compliance technology. The size of the bank and the vast operating expenses mean that the technology implementation does not really make much of a difference on the bottom line of the bank.

However, it is important to understand that budgetary constraints aren’t just a binary situation where either a bank can afford the solution or it cannot – the fact that the technology implementation is a significant investment for smaller banks ends up affecting many other factors as well.

Cloud solutions are generally the best choice for mid-size banks. Since they operate from the cloud, the bank does not need to install any hardware or network components to use the solution. Click To Tweet

Justifying Investment to Stakeholders

A major impact of the difference in expense significance between smaller and larger banks is how the shareholders view technology implementations. Larger banks tend to have millions of shareholders and it is unlikely that a few of them own enough shares to drive decision-making in the bank. While all decisions must be presented to shareholders, the shareholders are mostly looking at how much profit the bank can make and may not worry a lot about insignificant expenses on tech implementations.

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Mid-size and smaller banks are often backed by a smaller group of investors who are more directly involved with the operations of the bank and may have many questions about the necessity of the tech and about how the bank will generate ROI from it. Community banks have their own challenges when it comes to shareholders and stakeholders. Many community banks are created to serve the community and do not have profit as their main motive – this means that the shareholders are more interested in how the bank is managing its expenses.

This means that even if the board of the bank thinks that they will be able to generate ROI on a tech implementation in a few years, they may have trouble justifying the major expense to important shareholders.

Minimizing Disruptions

No bank can afford any disruptions in their operations, no matter the size of the bank. However, larger banks can avoid disruptions because they have enough extra resources to take some out of operations without it affecting overall performance. When a new technology is implemented, larger banks train their employees in batches – ensuring that while one batch is being trained, the other employees are holding the fort.

Smaller banks mostly have essential employees and only one or two risk and compliance teams. If the whole team is being trained, then there will be no alternative teams or employees to take the mantle. Thus, smaller banks need a solution that can be implemented with minimal business disruptions. This means easy training, no hardware or network disruptions, and so on.

Characteristics of The Perfect Solution for Smaller Banks

The next question is simple – what does a perfect solution look like for mid-size and smaller banks? Instead of highlighting a single solution, it is better to look at the criteria it needs to fulfill. Some of the most important features banks should look at include:


The solution being implemented should be modular in nature. The bank should have the option to start with the implementation of a single tool or module and then expand the scope of the implementation as their needs evolve. This is important because it allows banks to invest a small amount in implementing a part of the solution and gives them the opportunity to test the solution before making a bigger commitment.


A smaller budgetary footprint is not just important for the bottom line – it also has a major effect on how the implementation will be looked at by shareholders. An implementation that does not cost a lot will be easy to get approval for and will also quickly generate ROI for the bank.

Easy Implementation

The solution should also be easy to implement and not cause any major disruptions in operations. Cloud solutions are generally the best choice for mid-size banks. Since they operate from the cloud, the bank does not need to install any hardware or network components to use the solution. The implementation is thus very quick and implementation costs are also very low.

Are you looking for a solution that helps your bank achieve risk and compliance excellence while keeping risk and compliance costs as low as possible? Get in touch with our experts to see a demo of our risk and compliance solution designed especially for mid-sized banks.