Small businesses have long mystified banks. They make up an overwhelming 99 percent of all businesses—yes, 99 percent—and employ close to half of all workers. They generate more than 60 percent of the private sector’s net new jobs. Yet despite the critical role small businesses play in the economy, most banks struggle to generate strong returns from Read More
In June 2016, the Financial Accounting Standards Board (FASB) issued a new standard for the timely reporting of report credit losses on loans and other financial instruments—and in the process, created one of the most significant changes in recent years for financial institutions. The final version of the current expected credit loss standard (CECL) not only affects Read More
Last June, the Financial Accounting Standards Board (FASB) issued the final current expected credit loss (CECL) standard as a prevention technique to avoid a future financial crisis. And if CECL is new to you, you’re not alone. In a recent Fiserv webinar, more than 70 percent of industry professionals polled admitted to being only “a little” or Read More
Compliance with the requirements of Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations is too complex and challenging a job for a single bank department to manage. To be specific: While the reporting and investigation responsibilities reside in the Compliance staff, and legal/regulatory expertise with the legal department, the IT department must create the capacity to Read More
The past 10 years have seen an increase in the number and breadth of regulations aimed at the financial services industry, many of which stem from the financial crisis of 2007-’08. For example, requirements for capital adequacy, and restrictions on proprietary trading, have profoundly affected the covered institution. Yet beyond rules spawned the financial crisis, other rules Read More
Wealth management firms find themselves at different stages of readiness as they work to comply with Department of Labor’s (DoL) new fiduciary rule announced in April 2016. All financial services firms that manage retirement assets are facing a significant challenge as they develop and execute plans to bring their business operations in line with the new rule Read More
The success of online marketplace lenders is motivating banks to find ways to partner with these companies, acquire them, or duplicate what they see happening in this new industry. However, as banks look to initiate that collaboration, the task has been made more difficult by last November’s advisory letter from the Federal Deposit Insurance Corp. (FDIC) on Read More
Online marketplace lending is an industry rooted in the innovative culture of Silicon Valley that may soon have to find its way in the bureaucratic culture of Washington, D.C. As one federal agency after another launches a study of the technology and business practices of non-bank companies that make online consumer and small business loans, the odds Read More
With the recent Financial Accounting Standards Board vote to proceed and the final Accounting Standards Update now published, the Current Expected Credit Loss (CECL) standards remain top of mind for the C-suite in financial institutions. Even though the official adoption deadline has been pushed back to after December 2019, financial institutions should take actions today to help Read More
In April, a joint committee of federal regulators issued their long-awaited proposed rule limiting incentive-based compensation for bankers. The rule, part of the larger Dodd-Frank Act, largely reflects the industry trends in executive compensation over the last few years, but the key difference is the breadth of impact. This regulation, as it stands, will impact more employees Read More
Startup financial technology (FinTech) companies may be the best thing to happen to traditional banks in a long time. No, really.Many have warned that the introduction of digitally savvy options into a traditional market can be disastrous. After all, just look at what Uber is doing to the taxi business. In a heavyweight match between traditional banks Read More
Beginning in January of 2014, the Ability to Repay (ATR)/Qualified Mortgage (QM) Rule took effect, which establishes a standard to differentiate “qualifying” and “non-qualifying” residential mortgage loans. Since that time, many lending institutions have defaulted to making only qualifying loans.However, several prudential regulators have made it clear that avoiding nonqualified mortgages was not the intention of the Read More
Up to 5% of global gross domestic product (GDP) is lost annually to money laundering according to the UN Office on Drugs and Crimes. Considering that 2014 global GDP was $74 trillion, this means as much as $3.7 trillion could be laundered globally. In response, governments worldwide are giving financial institutions the role of being their eyes Read More
We are seeing a very fundamental shift in the focus and importance of vendor management. To a large extent, this is the result of the confluence of events that, taken together, point to the need to change the entire approach to vendor management at banks.First, we have become an industry that has outsourced. This is not a Read More
2015 was a key year of change for the banking industry, with disruption and innovation taking center stage. The pace of change is set to accelerate further in 2016, driven by the continued proliferation of technology, the emergence of non-traditional players across the banking value chain, overall pressure on banks’ bottom lines and evolving customer expectations.As a Read More
Don’t get lulled by the 2018 date for collecting the expanded data required under the revised Home Mortgage Disclosure Act (HMDA). Yes, banks and non-bank mortgage lenders have two more years to meet the requirements. However, collecting that data accurately and understanding the story it tells will likely turn into the equivalent of a tough hike through Read More
The concept of de-risking has become increasingly in vogue in the Bank Secrecy Act (BSA)/Anti-Money Laundering (AML) field. The idea behind de-risking is making a decision that specific customers of your financial institution present a risk of violating BSA/AML standards that is beyond the risk appetite of your institution. In other words, there are certain customers that Read More
Regulatory compliance is and always will be a major challenge for financial institutions, particularly when it comes to customer onboarding. A recent Pegasystems survey revealed that expanding Know Your Customer (KYC) requirements sits at the root of this problem, as 88% of banks say KYC has a significant impact on onboarding times. Forrester’s report, Client Onboarding In Read More
As regulatory pressures continue to mount, financial institutions are looking to their frontline staff to act effectively as their first line of defense when it comes to ensuring that the bank is acting in a compliant way with customers and discovering potential problems or bad actors in their own day-to-day operations. That was one of the conclusions Read More
In December 2012, the Financial Accounting Standard Board (FASB) proposed a new current expected credit loss (CECL) model. With it came a number of changes and controversy, as institutions recognized the potential of an increase in allowance levels as a result of the changes to how losses are estimated. While many institutions, associations and firms submitted comment Read More
