ST. CLOUD, Minn. – Despite its name, Bankers Systems Inc. isn't just for banks.
The 50-year old compliance/legal firm focusing on the financial industry serves over 80% of the nation's banks, but also one-third of credit unions – a figure it is working earnestly to increase.
Founded in 1952, BSI was run like a typical family business for close to 50 years. The company was started by Bill E. Clemens. The story goes like this: Clemens promised his dying father, who had been president of a bank during the Depression, that he wouldn't get into banking. So Clemens kept his promise to his father, but got as close to banking as he could by starting a firm serving banks' compliance needs. In the early days BSI mostly sold forms to banks, but as the regulatory environment changed, it diversified its product line, now offering a suite of compliance tools.
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In 1994 BSI was sold to investment firm Goldner Hawn Johnson and Morrison of Minneapolis. Then in August 1999 it was sold to one of the world's largest publishers, Wolters Kluwer of Amsterdam. BSI is now part of Kluwer's U.S. operations.
BSI is a unique firm in that it has vast tax, financial and legal specialists on staff, yet it isn't the one selling financial products like 401ks. It offers compliance and legal advice to those that do sell those products.
It has a legal department that in size (over 70 employees) rivals a large law firm. The legal team is dedicated to monitoring the state and federal regulations that affect the financial services industry. In all the company employs 812 people, including lawyers, retirement specialists, software developers, tax professionals, analysts, and others.
While the myriad of financial regulations may be frustrating to some credit unions, they are what makes BSI so valuable in the marketplace, said Peggy Wilson, director of marketing and communications for BSI.
Wilson said the "once a member, always a member" policy of many credit unions makes 50-state compliance coverage important to CUs. "If a credit union purchases a product from us the compliance considerations in all different states are taken into account. Members are mobile. Credit unions may be operating in many different jurisdictions with some of their members," said Wilson.
BSI's 7,000-plus financial institution client base gives it a 30,000-foot view of what regulatory issues financials are most concerned about for 2002.
Top of that list are the changing regs affecting Individual Retirement Accounts. Required minimum distributions are changing, which is a vital IRA compliance area. "The most controversial part of the proposed reg is that all financials have to begin to notify IRA accountholders about what their required minimum distribution amounts will be," said Wilson.
Contribution limits are also changing. This can cause CUs headaches with their IRA documentation requirements, said Wilson. Since it has to be the expert on any regulatory issue affecting financials, Wilson said BSI typically speaks directly with regulators about regulatory changes. On IRAs it speaks mostly with the IRS and Treasury.
BSI has a compliance hotline where clients can get immediate attention on a regulatory issue. It takes about 180,000 calls a year, of which about 70,000 are dedicated to IRA issues.
Another hot area of late is Reg E, which covers electronic funds transfers. Wilson said the days of consumers using e-checks are right around the corner. This involves the consumer writing a check, the creditor scanning it and handing the check back to the consumer. "Because of this there's a whole e-funds payment area emerging. Regulations haven't caught up yet," said Wilson.
Other hot-button issues for 2002 include OFAC, Web site compliance, and continued questions about privacy regs.
Wilson said BSI makes no secret about wanting to expand its CU client list. Although it has about one-third of all CUs (50% of CUs over $50 million in assets), it feels that there a lot more CUs that would be a fit for BSI. She joked that CUs are fortunate because BSI tried out a lot of stuff on banks early on, and has perfected it now for credit unions to take advantage of.
BSI recently released a credit union-specific lending software solution. Known as ARTA Lending, it is a 32-bit Windows-based lending documentation solution. It works for open-end and closed-end consumer, commercial, real estate and agricultural loans. It is compliant for all 50 states. "We know credit unions are interested in growing their member business lending products, and there are not a lot of compliance solutions out there," she said.
Wilson said technology is one area where the company has changed over the years. At one time a paper-based firm, it first moved into DOS solutions and now online and Windows-based tools.
BSI also hosts a popular compliance Web site at www.complianceheadquarters.com. [email protected]
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