Hoosier Banker 33 Created by The Coalition of Bankers Associations in 2011, the Regulatory Feedback Initiative (RFI) consists of an anonymous electronic survey for bankers to provide an assessment of their most recent examinations or visitations. Since RFI’s inception, banks have provided feedback on more than 3,000 examinations. In 2015 FinPro joined this important effort to assist with analyzing the data generated by RFI. The data through 2016 shows that banks are experiencing the lowest rate of regulatory criticism for safety and soundness examinations in the last four years. This trend mirrors public enforcement action data, which shows that the most recent enforcement actions listed for companies in 2016 is 135 – down from 175 in 2015, and down from a high of 398 in 2010. Apart from information technology, the trend is true across every CAMELS+ component. FinPro uses the bubble chart, shown at right, to monitor the regulatory environment, plotting the CAMELS+ components based on their risk to institutions and the regulatory focus. The bubbles move in accordance with the RFI findings, with input from FinPro’s staff of former senior regulators. Circumstances have changed dramatically since coming out of the financial crisis, as sensitivity and compliance have overtaken asset quality, strategic risk and IT risk. While it may seem contradictory for a company whose slogan is “Building Value Together” to utilize a chart which prioritizes valuation so low, it is important to remember that the market’s perception of risk, governance and regulation drive trading multiples. Many institutions find the chart useful in remaining focused on top priorities when discussing strategy or preparing for examinations. In an article published in the July 2016 Hoosier Banker titled “Tell Us the Good, Bad, and Ugly,” focus was provided on the feedback in the survey as to what the regulators should start, stop and continue. Following are “start, stop, and continue” lessons garnered for bankers from reviewing the data of the new RFI survey: Start incorporating technology into strategic planning. Falling behind in Fintech is a paramount strategic risk. This was a common theme through the regulatory panel and guest speakers at FinPro’s State of the Industry on Nov. 10, 2016. Moreover, on Nov. 18 at the 11th Joint Community Banker Symposium, the Comptroller of the Currency echoed this sentiment stating, “One particular issue testing bank’s strategic risk today is the tectonic shift underway regarding innovation and financial technology.” Both sessions addressed the The Regulatory Feedback Initiative Reports on latest findings FEATURE Article author Donald J. Musso President & CEO FinPro Inc. dmusso@finpro.us
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