Pub. 9 2019-2020 Issue 5

O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S — H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S March • April 2020 11 customers is not fully mature or where it needs to be yet. If they want tomeet the challenge of attracting a younger demographic, they must be able to deliver an exceptional and personalized customer experience on a digital platform.” • Customer Data Management: Less than Stellar Collecting and utilizing customer data is by far the greatest challenge for bankers in 2020 (2.5/5). Recognizing this deficiency should drive institutions tomore effectively leverage customer data—whether held by themselves or their vendors—to create new revenue streams. Attracting Customers Through Technology More and more retail and commercial customers are demanding a seamless banking experience. And it’s not just the centennials and millennials; Gen Xers and baby boomers also want immediate access to bank products and services. Financial institutions will need to leverage technology to meet these expectations if they want to retain existing customers and attract new ones. The CSI survey asked bankers to rank the technologies their institutions will use to attract new customers. The results? Bankers are digitally focused: 1. Mobile Banking Apps: Bankers know their mobile app is the best way to attract new customers. Given that a mobile app puts your bank directly in the hands of consumers, enhancing its functionality is a smart way to secure and increase your customer base. 2. Digital Onboarding: Unless you provide new customers with immediate access to your bank and their accounts through digital onboarding, it will be difficult to remain competitive in today’s landscape, much less tomorrow’s. 3. Customer Relationship Management (CRM): Institutions making good use of their CRMcan leverage customer data to proactively offer beneficial products and services to customers, even before they realize they need them. 4. Digital Lending: Digital lending ranked the second- least important, only ahead of social media outreach. However, digital transformation is incomplete without digital lending. 2020’s Top Cyber Threats in Banking The survey delved deep into cybersecurity threats to gauge bankers’ understanding of this continuously evolving risk, asking what is the greatest cybersecurity threat to your bank in 2020? • Social Engineering: This was the clear winner, with 41% of bankers ranking it highest. This tracks with the enduring popularity of social engineering with hackers, for the ease with which it consistently preys on human emotion to gain access to financial systems and data. • Third-party Data Breaches and Ransomware: At 21% and 20%, respectively, these threats followed social engineering. Combat these issues by conducting sound due diligence on vendors’ cybersecurity readiness and frequently back up your data. Despite acknowledging the severity of these threats, bankers seem ready for them, rating themselves 3.7/5 in cybersecurity readiness. While it’s encouraging that institutions feel so confident about their cybersecurity readiness, at the same time, it’s concerning. Experts warn that, as fast as institutions get a grip on the latest hacking techniques and install preventative measures, cyber criminals adjust and adapt. 2020 Regulatory Focus In order to gain an understanding of how bankers would prioritize their compliance strategies for 2020, the survey asked: which upcoming regulatory issues weremost 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 existingsmall corporationsand limited liabilitycompanies 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 viewMarijuana Related Businesses (MRBs) as a potential new target industry, as a regulatory issue, it was not ranked as a priority. From compliance readiness to extending their digital reach, bankers are set to hit the ground running in 2020. Is your institution set to keep pace? n Download the Full Executive Report Get a full breakdown of the survey data by downloading the 2020 Banking Priorities Executive Report. Steve DuPerrieu is vice president of Product Management for CSI.