MINNEAPOLIS, Minn.–The regulatory compliance and risk-management concerns of U.S. banks and credit unions increased in 2017 by 3% over the prior year, according to the Regulatory and Risk Management Indicator survey by Wolters Kluwer.
The survey further found bank and credit union executives are also not expecting any regulatory relief in the near future.
While concerns over several specific challenges such as fair lending exam scrutiny and new Home Mortgage Disclosure Act rules remained high, other compliance-related factors—including the ability to track, maintain and report to regulators—remained steady or declined slightly, the company reported.
The Indicator survey was sent to banks and credit unions nationwide earlier this fall and generated 608 responses.
Overall, risk management concerns jumped by 13% over the 2016 Indicator results, according to Wolters Kluwer. Cybersecurity and data security led the list of top risks that respondents anticipated giving escalated priority to in 2018, with an 83% ranking of “concerned” or “very concerned,” followed by IT risk (54%) and regulatory risk (50%). These responses echo and underscore recent statements from senior federal bank regulatory officials about burgeoning cybersecurity risks.
“These results—compiled against a backdrop of highly publicized data breaches at well-known entities, and at a time when financial institutions are preparing for the implementation of the most significant set of HMDA changes in several decades—drove the increase in concerns expressed in this year’s survey,” said Timothy R. Burniston, senior advisor and principal regulatory strategist at Wolters Kluwer, in a statement.
When asked about the likelihood of a measurable reduction in regulatory burden anticipated over the next couple years, 69% responded that such relief was “not likely,” the survey found.
Other findings include:
- Efforts in implementing risk management programs remained relatively steady, with modest progress in those characterizing their organization’s efforts as having either an integrated, strategic risk management program (37%) or a well-defined but not enterprise-wide implemented program (33%) versus those in the early stages of program development (22%).
- Respondents expressed concern about optimizing their organization’s compliance costs (78%), reducing exposure to financial crime (72%), and managing compliance monitoring and testing (73%). In a free-text response question, the HMDA rules going into effect Jan. 1, 2018, were cited as the single biggest compliance challenge.
- Regulatory examiners’ scrutiny of fair lending programs was seen as a growing pain point, jumping five percent over the prior year’s survey, with 46% of respondents noticing either a considerable or slight increase in scrutiny based on their institution’s most recent exam.
- Respondents cited a multitude of obstacles to managing an effective compliance program, led by “inadequate staffing” (46%), “manual rather than automated processes,” (39%), and “too many competing priorities” (34%), according to Wolters Kluwer.
For info: www.WoltersKluwerFS.com/Indicator.