U.S. financial service firms are most concerned about keeping up “with the volume, scope and breadth of regulatory changes” heading into the new year, according to Wolters Kluwer’s annual Regulatory & Risk Management Indicator survey.
The survey, taken from July 27 to Sept. 9, included responses from 328 firms. Concern over new regulations jumped considerably, from a score of 67 in 2021 to 114 this year.
According to the survey, nearly 70 percent of respondents are “very concerned” or “somewhat concerned” with meeting the Consumer Financial Protection Bureau’s proposed Section 1071 rule requiring financial institutions to collect and report information in connection with credit applications from small businesses, including women and minority-owned small businesses. The CFPB is required to complete the rulemaking process by the end of March.
Sizable but smaller percentages were concerned by their ability to comply with Bank Secrecy Act and anti-money laundering requirements and Current Expected Credit Losses standards. The top risk management priority for financial service firms entering 2023 is cybersecurity, followed by risks from compliance, credit, operations and third parties.
“The banking industry increasingly recognizes the upsides in employing and more fully leveraging digital processes and automation, particularly given their impact in reducing or eliminating time-consuming and less accurate manual processes from their everyday workflows,” said Wolters Kluwer Compliance Solutions Executive Vice President and General Manager Steven Meirink.