Banking

A few months ago, the HORNE Banking team put together one of our most widely read and shared posts of all time, entitled Hey, Community Banks. This is What Really Matters to Your Millennial Customers. In it, we cited research from the Pew Institute highlighting that the value and power of this group come somewhat from its size: “By 2020, it is estimated that one in three Americans will be labeled a Millennial – and by 2025, 75% of our workforce will be composed of Millennials.” We noted the importance of technology, social media and personalization for banks trying to engage a generation that has more members in the U.S. Labor Force and that is the most diverse, well educated and well informed in our history.

If you’re planning to expand your financial institution into another city or state, whether through location based expansion or an M&A approach, proper planning is important. Building a plan before you embark on expansion can help to ensure the success of your growth, secure your compliance, and keep you from costly penalties. 

The HORNE Banking team has been active lately, going to select conferences around the Southeast to gather insights about the current and future state of the banking industry. Most recently, I attended the Mississippi Young Bankers (MYB) Study Conference and Convention. In its 66^th year, this event is a chance to learn and network with the future banking industry leaders.

Last week, we reported some eye-opening cybersecurity statistics discussed at the Tennessee Bankers Association’s Credit Conference. While the focus of these conversations centered on the credit process, managing breaches has become one of the most significant focus areas for businesses of all kinds. 

My HORNE Cyber Solutions colleagues and I just spent two wonderful days at the annual Alabama Banker’s Association (ABA) Bank Operations and Management Summit. Talks and discussions during the event centered on three overlying themes. We have discussed some of them previously in this blog, and all are pertinent to your banking organization.  

Last week, a group of community bankers from the Independent Community Bankers of America (ICBA) and representatives from the American Bankers Association (ABA) met with the Financial Accounting Standards Board (FASB) to discuss concerns about the upcoming impairment standard on credit losses. The meeting came partly as a result of two years of requests from the ABA to consider the implications of accounting changes on community banks.

Over the course of working with a variety of banks, I have seen numerous approaches to the audit committee role. In the best cases, the audit committee works in collaboration with the internal audit (IA) group, the external auditor and management toward a set of common goals. In others, work groups are compartmentalized and focused on their own work, not sharing information or goals.

Not long ago, Big Data was little more than a term bandied around by the technology, sales, and marketing communities. Today, this body of intelligence is used across virtually every sector, like banking, that integrates online and offline customer channels.

With continued exponential increases in data collection (50 times year over year), big data has become an accepted – and expected – part of a cohesive operational strategy. But it’s not without challenges. 

Changes in technology, demographics, globalization, regulations, and interest rates have altered the business of banking dramatically. In the past few weeks, the Wall Street Journal reported that for the first time ever, more people are using mobile banking apps than going into bank branches on a weekly basis (39% versus 24%). The stat is not all that surprising. What is telling is how quickly we reached that pivot point.

“The new standard is intended to provide users of financial statements with more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. It improves the accounting model to better meet the requirements of today’s complex economic environment.”

FASB Chairman Russell G. Golden / January 5, 2016

On January 5, the Financial Accounting Standards Board (FASB) issued a new Accounting Standards Update (ASU) – the Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. According to FASB, the update is intended to improve the reporting model for financial instruments, giving users of the financial statements with more practical information. The ASU mandates a number of items that affect banks, with implementation set for 2017 for public companies and 2018 comprehensively.  

As 2015 was coming to a close, the AICPA Conference on Current SEC and PCAOB Developments brought together financial statement regulators, preparers, and auditors in Washington D.C. to discuss accounting, reporting, and audit practice issues. Keynote speaker, SEC Chairwoman Mary Jo White, along with other speakers and panelists discussed actionable steps for improving the U.S. financial reporting system. 

The last time the Federal Reserve increased rates was 2006. After predictions and discussion of a rising rate environment for a while, a unanimous vote brought the interest rate up a quarter-point this past week. While Chairman Janet Yellen says that future rate hikes will “come slowly” and such a minimal increase is unlikely to move the needle much, it warrants community banks taking the time to consider how it will impact balance sheets – in light of how it will influence customer behavior.

Banks are like many other organizations in that they are adept at producing data yet often fall short on interpreting and applying its value. But for banks in particular, analytics are incredibly important. The ability to read and interpret collected intelligence is critical to a sound internal audit (IA) function.