Hoosier Banker 37 education is the most important tactic to pursue in 2019. It’s no surprise respondents called cybersecurity the main issue for 2019. This illustrates that cybersecurity awareness is finally accepted as a fundamentally important concept of business. Cybersecurity affects all aspects of an institution throughout the enterprise. It’s also encouraging to see employee education topping the list for 96 percent of respondents as the best cybersecurity tactic. This approach is one of the strongest controls institutions can implement to provide tremendous security value in a cost-effective manner. As to other tactics for battling hackers in 2019, ongoing vulnerability assessments came in at 78 percent, and social engineering/penetration testing at 79 percent. The survey’s overall responses demonstrated that institutions realize the need for a layered security approach. Regulatory Compliance Key data – • More than 75 percent of banks are spending up to 20 percent of their budgets on regulatory compliance alone. • Most banks (nearly 75 percent) will spend up to 40 percent of their budgets on compliance and cybersecurity. • 16 percent of respondents think that the Economic Growth, Regulatory Relief, and Consumer Protection Act will most affect the financial industry in 2019. With regulatory relief signed into law by President Trump, it’s reasonable that bankers are anxiously awaiting regulatory guideline changes and new rules. Further, cybersecurity goes hand-in-hand with compliance, as prudential regulators will examine financial institutions’ vendor management and incident response programs to ensure a robust cybersecurity program. A good portion of institutions’ budgets will surround the usual suspects: 1. Current Expected Credit Loss: As the implementation date nears, many bankers are looking for third parties to assist in their CECL calculations. 2. Bank Secrecy Act: Bankers implemented the beneficial ownership rules and regulations, along with ongoing monitoring known as the “fifth pillar” in 2018. Therefore, they must ensure their policies and procedures adhere to recent guidance. 3. Change management: Regulators want to ensure that institutions have adequate resources to handle the changing regulatory landscape. Lending Key data – • 39 percent of respondents’ customers are small businesses, and nearly 90 percent of bankers surveyed service small-business customers through commercial lending. • 40 percent of bankers identified loans as the most important channel for attracting new customers. • 10 percent of respondents indicate loan growth will be key in reaching new customers. Bankers can augment their small-business lending by letting automated solutions handle the establishment of basic lines of credit and term notes. Since lending is a top strategy, here are important points to consider: 1. It’s difficult for small-business loans of less than $25,000 to be profitable for a bank. The market suggests that there are better ways to originate loans in the small-business space, especially if those loans are less than $100,000 and not secured by real estate. 2. If your institution’s loan volume is down, it’s likely your customers are securing funds elsewhere. The opportunity in this space becomes very appealing when digital technology is applied. These are high-margin, short-term loans you can deliver through digital channels with minimal investment. 3. Flexible opportunities delivered via the proper channel of mobile banking services/internet banking are plentiful. Investments in digital technology as it pertains to traditional lending, such as residential real estate, also are important. To see how your strategies compare to those of the survey respondents, download CSI’s 2019 Banking Priorities Executive Report.* HB Managing the web of complex issues and regulatory constraints that surround banking today has never been more challenging. So the deep expertise of our banking team has never been more vital. Make life easier. Call us today. New Albany 812.945.2311 Louisville 502.423.0311 monroeshine.com CERTIFIED PUBLIC ACCOUNTANTS Audit & Assurance BSA & ACH Compliance Outsourced Internal Audit SEC & SOX Compliance Loan Review IT Risk Management Consulting Services Merger & Acquisition * Download the report at: go.csiweb.com/WP_CSI_BankingPriorities19_WP_CSI_BankingPriorities19_LP.html
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