Pub. 8 2018-2019 Issue 5

14 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S that institutions realize the need for a layered security approach. Regulatory Compliance Key Data: a. More than 75% of banks are spending up to 20% of their budgets on regu- latory compliance alone. b. Most banks (nearly 75%) will spend up to 40% of their budget on compli- ance and cybersecurity! c. 16% of respondents think the Regu- latory Relief Act will most affect the financial industry in 2019. With the Regulator y Relief Act signed into law by President Trump, it’s reasonable that bankers are anxiously awaiting the changes—and new rules— expected to regulatory guidelines. Further, cybersecurity goes hand- in-hand with compliance, as pruden- tial regulators will examine financial institutions’ vendor management and incident response programs to ensure a robust cybersecurity program. And, a good portion of institutions’ budgets will surround the usual suspects: 1. CECL: As the implementation date nears, many bankers are looking for third parties to assist in their CECL calculations. 2. BSA: Bankers implemented the benef icia l ownership rules and regulations, along with on-going monitoring known as the “fifth pillar” in 2018. Therefore, they must ensure their policies and procedures adhere to the recent guidance. 3. Change Management: Regulators want to ensure that institutions have adequate resources to handle the changing regulatory landscape. Lending Key D ata: a. 39% of respondent s’ customers are small businesses. And nearly 90% of bankers surveyed service small-business customers through commercial lending. b. 40% of bankers identified loans as the most important channel for at- tracting new customers. c. 10% of respondents say loan growth will be key in reaching new customers. B a n k e r s c a n au gme n t t h e i r sma ll-business lending by let t ing automated solutions handle the estab- lishment of basic lines of credit and term notes. And since lending is most certainly a top strategy for 2019, here are important things to consider: 1. It’s difficult for small-business loans of less than $25K to be profitable for a bank. The market would suggest that there are better ways to orig- inate loans in the small-business space, especially if those loans are less than $100K and NOT secured by real estate. 2. If your institution’s loan volume is down, it’s likely your customers are securing those funds elsewhere. The opportunity in this space be- comes very appealing when digital technology is applied. These are high-margin, short-term loans you can deliver through a digital channel with minimal investment. 3. Flexible oppor tunities delivered via the proper channel of mobile banking services/internet banking are plentiful. Investments in digital technology as it pertains to tradi- tional lending, like residential real estate, also are important. Also, over the next few months, CSI’s industry experts will be diving deeper into each of the areas mentioned above, so please watch for further insight on the survey results. In the meantime see how your strategies com- pare by downloading CSI’s Executive Report: 2019 Banking Priorities.  Steve DuPerrieu is vice president of product management for CSI. In his role, he provides leadership for CSI’s delivery channel strategy, which includes digital banking, payment services, business and analytics software, and branch/ retail delivery solutions. Steve is also a board member for the Association for Financial Technology (AFT).