Concerns about risk management and regulatory compliance in the US banking industry remain high but have decreased compared with previous years, according to the 2024 Regulatory & Risk Management Indicator survey by Wolters Kluwer.
The 2024 Indicator Main Score dropped from 119 in 2023 to 99 in 2024, reflecting a return to 2022 levels.
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This decline is attributed to fewer major regulatory changes in 2023 and increased confidence among respondents in managing compliance challenges.
Despite fall in the overall concern index, nearly half of the respondents still express significant worries about risk management and regulatory compliance obligations.
The survey, which included 258 US banks, credit unions, and lending organisations, took place from 8 July to 5 September.
The Consumer Financial Protection Bureau’s Small Business Data Collection Rule remains a top challenge, with 69% citing it as a concern, followed by fair lending regulations and the Community Reinvestment Act requirements.
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By GlobalDataAnxiety over economic factors lessened, with interest rate, inflation, and recession concerns all showing a decline from the previous year.
However, loan default risk remains a consistent worry. Concerns over ransomware attacks have decreased, while operational resiliency has gained more attention, according to the survey
Expected spending on compliance management systems rebounded, with regulatory content management being the top investment area.
The integration of Enterprise Risk Management plans is slowly increasing, yet a third of organisations still operate without a formal programme.
Cybersecurity threats are the top escalated risk priority, followed by compliance and credit risks.
Regulatory scrutiny of fair lending practices is perceived to have either remained the same or increased, with a high level of scepticism regarding the likelihood of reduced regulatory burdens.
Technology-driven solutions, particularly workflow automation and e-signatures, are seen as key to addressing these challenges.
Wolters Kluwer Compliance Solutions, compliance analytics market strategy director Jason Keller said: “While there have been some encouraging signs in banking this year including the diminished threat of a recession and the Fed’s lowering of interest rates, survey respondents continue to face significant economic and regulatory headwinds.
“Based on 2024 survey responses, interest rates, while lower, persist at levels that bring enormous challenges to borrowers and lenders alike, while managing regulatory change persistently tops the list of reported concerns in our survey. “Despite the industry’s track record in dealing with regulatory changes with a high degree of resilience and flexibility, they are pressures that are unsustainable in the long run.”
