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Technology helps banks to be compliant but increases costs
With increased reliance on technology in the 21st century, the banking sector has witnessed an ease in the compliance burden. This, however, has increased their compliance budget according to Bank Director’s 2018 Risk Survey, sponsored by Moss Adams LLP. 55 percent of people in the banks, be it the directors, CEOs, chief risk officers, and senior executives, all responded to a survey by agreeing that technology has increased the budget in order to improve the compliance function. Contrary to this, only 5 percent said that technology has decreased their compliance costs.
The technological solutions used in the banking sector have been named as ‘regtech’. According to the majority of respondents, technology is used to comply with Bank Secrecy Act, Know Your Customer (KYC) rules, Vendor Management, and Community Reinvestment Act. In order to examine the risk landscape surrounding the banking industry which comprises cybersecurity, credit risk, and the impact of rising interest rates, Risk Survey was conducted in January, 2018 which surveyed 224 CEOs, chief risk officers, senior executives, and board executives of all the US banks having more than $250 million assets and recorded their views.
For both the executives and directors, cybersecurity remains a concern. Al Dominick, CEO of Bank Director, says that bankers have to stay awake for nights owing to cybersecurity. He talks about the surveys made over the years that reveal board of directors and executives have demonstrated consistent efforts to tackle cybersecurity. However, it’s very difficult to nab the cybercriminals which the industry also agrees to.
Additional findings of the research on cybersecurity found that 69 percent employees trust their banks believing that they have an adequate level of in-house expertise to address cybersecurity. Almost all the respondents said that their banks have incident response plan intact to address any kind of cyber attacks. However, 37 percent bankers are in a dilemma on whether the response plan will be effective. Again, 69 percent employees said that bank conducted simulated cyberattacks last year.
Craig Sanders, a partner at survey sponsor Moss Adams LLP, feels that with the disturbances in technology, changing forecasted rates, and pressure in regulatory compliance, there is every chance of a storm brewing up in the banking industry that needs cautious navigation by the board and bank management.