Banks and credit unions are markedly more worried about regulatory compliance and risk management, according to new data. The results of the Wolters Kluwer Regulatory and Risk Management Indicator revealed that overall risk management concern is up 13 percent over the year. Regulatory concerns are up 3 percent for the same period.
According to the Indicator, which polled more than 600 banks and credit unions across the country, top regulatory concerns include the fair lending exam, new Home Mortgage Disclosure Act rules, and the ability to track, maintain, and report to regulators. Just under 50 percent of respondents said they’ve noticed increased scrutiny based on their most recent fair lending exam, while HMDA changes came in as the single-biggest concern across the board.
As for risk management, cybersecurity and data security topped the list, with a whopping 83 percent of those surveyed saying they’re either “concerned” or “very concerned.” IT risk and regulatory risk also came in high.
According to Timothy R. Burniston, Senior Adviser and Principal Regulatory Strategist at Wolters Kluwer, 2017’s many data breaches are likely to blame.
“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,” Burniston said.
On the compliance front, respondents were mostly concerned with optimizing their compliance spend, reducing exposure to financial crime, and managing their compliance monitoring and testing efforts.
“These responses, when viewed collectively, reinforce for financial institutions the strategic imperative of having a proactive, well-staffed and supported corporate compliance program that operates across the three lines of defense —the business units, along with compliance/risk and audit areas—in tandem with an overarching risk management framework integrated with all lines of business,” Burniston said.