2022 Priorities of Focus for Financial Institutions

As we continue to look ahead, what risks and enhanced areas of focus will 2022 bring?

Compliance Priorities

As compliance risk remains heightened, various regulations and compliance-related areas continue to face increased scrutiny.

Financial institutions must continue to enhance their efforts surrounding fair lending and enforce it as a top priority. It is important that compliance reviews embody the formation, operation and outcomes of fair lending decisions.

A review of the institution’s overdraft program should also be a priority. As the impact tends to be greater for lower-income customers, banks should be considering updates to their program features to assist in providing alternatives to overdrawing accounts. These practices should be easy to understand and fully disclosed to customers.

Although compliance with regulatory requirements is essential, financial institutions should also be focusing on their overall effectiveness and efficiency across the organization. This entails automating processes and enhancing third-party relationships.

Cybersecurity Focus

As the trend is showing no sign of slowing, ransomware can be devastating for financial institutions, especially if regular data backups are not maintained. Threat monitoring, incident response and overall risk management are critical when preventative tools fail. Additionally, even with sophisticated monitoring tools in place, employees are still recognized as a significant risk to cybersecurity. Continuous education on best practices is vital to strengthening the front line of defense.

Financial institutions may do a good job of protecting their networks from invasion, but cyber risks remain. Various solutions in the industry are available to help deliver control of cybersecurity. 

Interest Rates

Although interest rates have been low and margins have remained steady, volatility is likely to emerge.  Inflation will be a key driver in terms of the frequency and volume of increasing rates.  As a result, financial institutions should review and potentially revamp their interest rate risk management and asset liability management strategies.  This will help ensure effective management in a more volatile interest rate market.

Given the continuing economic uncertainty, risk management and governance have become more crucial for success in the banking industry.  A strong governance structure must be in place to ensure that the appropriate decisions are being made by management and that up-to-date information consistently flows throughout the organization.  New risks will continue to emerge related to social and financial issues.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2022 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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