Amid the digital upheaval in our industry, one thing hasn’t changed: regulatory compliance. In fact, given digital transformation, it is even more important that institutions maintain their compliance with federal, state and local laws and regulations.

To understand how bankers view the regulatory landscape heading into 2020, CSI, a leading provider of fintech solutions, polled banking executives from around the country, representing 227 financial institutions from across the asset-size spectrum. The data from this survey was then collected and used to create an executive report to help bankers get a pulse on the industry’s hot topics and strategies.

Focusing on Regulatory Compliance

In order to gain an understanding of how bankers would prioritize their compliance strategies for 2020, the survey asked: which upcoming regulatory issues were most important to financial institutions on a scale from 1 to 5, with 5 being the most important?

• Data Privacy: An average rating of 3.9/5 reveals industry anxiety about GDPR and CCPA compliance, as well as concern that more state-enacted privacy laws—each with their own nuances—is looming. Keep in mind that digital-only strategies will likely expand customer bases into even more jurisdictions that may have distinct privacy laws.
• BSA/AML and Beneficial Ownership/CDD Rule: Bank executives think BSA/AML modernization (3.5) is a vital issue in 2020, as is the corresponding Beneficial Ownership/CDD Rule (3.3/5). But there’s good news. The Corporate Transparency Act of 2019 would transfer some of the burden off of banks, as it “requires certain new and existing small corporations and limited liability companies to disclose information about their beneficial owners.”
• Reg CC and CECL: Rounding out the top 5 most important regulatory issues, bankers identified upcoming changes to Regulation CC (3.4/5) and the Current Expected Credit Loss (CECL) standard (3.1/5).
• Marijuana Banking: Although a growing number of banks view Marijuana Related Businesses (MRBs) as a potential new target industry, as a regulatory issue, it was not ranked as a priority.

Spending on Regulatory Compliance

For the financial industry, compliance is an ever-weaving web of intricacy. So, which regulatory issue will claim the largest percentage of banks’ 2020 budgets?

• Data Privacy: In a sign that compliance priorities match budget plans, institutions are poised to spend the most on the area they considered most important, as 42% answered data privacy.
• CECL: However, their next regulatory spending priority is CECL, at 21%. Although it ranked fifth in importance, institutions recognize the extensive effort required to implement this huge overhaul in loan loss accounting, even with a delayed implementation date for most institutions.
• AML and Vendor Management: At 16% and 11%, respectively, these issues will take the next largest share of budget dollars.

As a whole, will there be any change in the percentage of overall bank budgets for regulatory compliance spending?

• Institutions are split, with 49% set to increase spending and 51% that plan to spend the same as in 2019.

Download the Full Executive Report

Get a full breakdown of the survey data by downloading the full Banking Priorities 2020 Executive Report.