Bankers worried over compliance burden, study shows

U.S. lenders continue to be concerned over meeting more burdensome compliance standards, according to a recent Wolters Kluwer Compliance Solutions study

The annual survey found a Main Indicator score of 128, a 25-point increase from 2020, a jump fueled by ongoing concerns over navigating regulatory changes and increases in regulatory fines and risk. The number has increased by 43 points over the past three years.

The calculation of the Main Indicator Score is based on the number of new federal regulations, enforcement actions, and the dollar amount of fines imposed on credit unions and banks over the previous 12 months, with survey respondents’ input. The survey was undertaken nationwide between Aug. 4 and Sept. 6, generating nearly 400 responses. 

 Other top concerns were the threat of ransomware attacks (63 percent of respondents), the pandemic’s ongoing impacts (49 percent), followed by inflation worries (42 percent) and loan default risks (46 percent). More than 6-in-10 bankers anticipated “significant” or “some” gains in their digital lending processes. Nearly half reported making progress with digitizing lending capabilities, while less than one-quarter made significant progress or are completely digitized. Sixty three percent said the threat of ransomware attacks led their list of factors in enterprise risk planning, with an equal percentage giving it “significant consideration.” 

“Relatively high levels of concern remain across a range of areas, reinforcing the fact that regulatory compliance and risk management issues continue to pose challenges for financial institutions,” said Timothy R. Burniston, senior advisor for regulatory strategy with Wolters Kluwer Compliance Solutions. “Respondents expressed their highest levels of confidence in the past four years regarding their organizations’ ability to track regulatory changes and document compliance with those requirements to regulators. Nonetheless, the level of concern is still high.”

Bankers were not optimistic that the regulatory burden would ease in the next two years: More than 70 percent said the likelihood of regulatory relief was either “somewhat unlikely” or “very unlikely,” compared to 56 percent last year. Bankers reported that manual compliance processes and inadequate staffing were top obstacles to implementing effective compliance programs. 

“The concerns expressed by survey respondents reflect another year of challenges for the U.S. banking industry as it navigates through the pandemic — and the evolving regulatory and risk landscape,” said Steven Meirink, executive vice president and general manager for Wolters Kluwer Compliance Solutions. “The industry’s resiliency has enabled it to address these challenges admirably, and we continue to support our clients in staying compliant so they can serve customers with confidence.”