Credit unions and banks are having pressure complying with regulatory requirements when it comes to managing risk, according to a study from Wolters Kluwer Financial Services.
The risk mitigation software provider's regulatory and risk management indicator for August revealed a score of 128 when surveying 300 financial institutions regarding their ability to manage compliance obligations and risk. The indicator began in January 2013 with a baseline score of 100.
From a compliance standpoint, 72% reported in the latest survey ongoing challenges complying with new regulations. For example, three-quarters of survey respondents in August are having difficulty complying with the Consumer Financial Protection Bureau's Truth in Lending Act/Real Estate Settlement Protection Act.
Additionally, the CFPB's new Home Mortgage Disclosure Act reporting requirements remains a challenge for companies as the percentage for this survey question has risen from 45% to 63% between January 2013 and August. Respondents cited specific concern over the extensive amount of new data field sets and accurately populating those fields correctly. Furthermore, companies reported having difficulty updating their own technology systems to handle the changes.
The survey said that 44% of credit unions and banks are concerned about their overall ability to manage risk now compared to nearly two years ago. One in three survey respondents have hired staff or transferred employees from revenue-generating roles to help manage the growing risk.
Some of the most notable concerns financial institutions are worried about are regulatory risk, IT risk, fair lending risk and fraud. In addition, fewer than one in five respondents said their companies have a strategic enterprise risk management program in place to deal with regulatory issues.
"The survey results provide a compelling argument for continued investment in systems and approaches financial institutions can employ to address these mounting regulatory and risk obligations," Tim Burniston, senior director of the risk and compliance consulting practice at Wolters Kluwer Financial Services, said in a press release.