Abound Resources Survey Reveals a Positive Outlook Amid Growing Regulatory Concerns in Community Bank and Credit Union’s 2011 Plans

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Community Bank and Credit Union CEOs are feeling more optimistic about 2011 than they felt about 2010, but their #1 concern is meeting regulatory compliance.

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2011 CEO Top Priorities

They don’t have internal resources to keep up with all the changes and the documentation required. For most, external assistance will be required to fully prepare for the coming regulatory requirements,” said Brad Smith, President of Abound Resources

The top two concerns for community bank and credit union CEOs this year are closely related and speak to the industry’s concern over increasing regulatory burdens. The leading issues are addressing new regulatory compliance requirements and, a close second, dealing with fee income issues related to Reg E.

According to Abound Resources’ newest survey results (download results), despite the cloud created by the regulators, CEOs are feeling more positive than last year. 20% report that they are either somewhat or very pessimistic about 2011, as opposed to 32% going into 2010. Credit union CEOs are feeling slightly more optimistic than bank CEOs. Almost half of them (44%) feel either somewhat optimistic or very optimistic about 2011. About 40% of community bank CEO’s express optimism about the upcoming year.

“One of the reasons community institutions are so concerned about the regulatory environment is that they don’t have internal resources to keep up with all the changes and the documentation required. For most, external assistance will be required to fully prepare for the coming regulatory requirements,” said Brad Smith, President and CEO of Abound Resources.

Overall priorities for 2011 have changed from last year’s top priority of cleaning up the balance sheet to this year’s focus on efficiency and growth. The survey finds that 66% of bank CEOs are focusing on growing commercial loans, while 85% of credit union CEOs are focusing on growing consumer loans. Using technology to increase efficiencies was a mutual #2 priority by 64% of bank CEOs and 74% of credit union CEOs. Credit union CEOs went a step further with technology by naming “expand online presence” (62%) as an additional priority focus for 2011.

With technology such a focus area, Abound Resources polled operations, technology, and financial officers regarding their technology concerns and project plans.

According to the survey, just like their CEOs, chief operating officers, chief information officers, and chief financial officers at banks and credit unions are hoping to get more value from existing technology and vendor relationships, naming it as their top technology concern. They also share concerns about information security and compliance, but credit union execs also worry about not having enough resources to complete projects and about how budget constrains will impact important projects.

“The best two opportunities for cost savings and efficiency improvements are negotiating contracts and streamlining processes. If you have a major contract coming due in the next two years such as core, EFT, Internet banking, bill pay, item processing or telecom, our advice is to explore breaking that contract in the next 90 days. If you approach it right, most vendors will allow it if you extend the terms of the original contract - and they’ll give you better pricing starting right now. Streamlining processes can provide efficiency improvements, customer benefits and risk management improvements, The big three to focus on are new accounts, loan origination and customer service processes,” said Mr. Smith.

Other key technology findings:

  •     New or replacement purchases on the agenda for banks and credit unions are focused heavily on mobile banking. However, 70% of Credit unions are making consumer remote deposit capture (RDC) their priority purchase, compared to only 27% of banks for 2011.
  •     Asset liability management (ALM) systems and network equipment/storage/server virtualization rank as the highest priorities for banks’ highest priority for utilization improvements, while credit unions are focusing on improving the use of their core processing, fraud management, and new account and teller systems.
  •     While high on bank execs’ lists for contract renegotiation, core processing was surprisingly missing from the credit union execs’ top five priorities.

The complimentary survey results of CEO priorities and planned community bank and credit union technology priorities can be downloaded at survey results.

Abound Resources provides Management Solutions to support Growth, Efficiency and Technology in Community and Regional Financial Institutions through:
•Increasing ROI on Technology
•Improving Risk Management Practices and Regulatory Compliance
•Improving Operational Efficiency
•Improving Cash Management Strategies
•Improving Branch and Delivery System Performance
•Increasing Small Business Market Share
•Enhancing Effectiveness and Implementation of Strategic Plans

Abound Resources helps community banks and credit unions grow, become more efficient and save money, and make the right technology decisions – Guaranteed. As an advisory services firm, Abound Resources provides the following solutions:

  •     Growth solutions:

–    Maximize commercial cash management opportunities
–    Improve new account and loan origination turnaround times and cross selling
–    Develop retail and alternative delivery strategies
–    Design products and a delivery strategy to attract Gen X/Gen Y customers    

  •     Efficiency and Cost Saving solutions:

–    Redesign back office processes for improved efficiency, risk management, and customer service
–    Negotiate next core, EFT, Internet banking or bill pay contract for big savings
–    Help prepare for next acquisition or integrate recently acquired institutions

  •     Technology Decision solutions:

–    Decide whether to replace core, EFT, Internet banking and bill pay systems
–    Research online account opening, mobile banking or CRM
–    Improve the utilization of existing technology investments
–    Develop a technology plan to support business strategy

Kimberly Costello, Marketing Director, 512-351-3703, kwilliams(at)aboundresources(dot)com
Ryan Esquell, VP of Sales & Marketing, 512-351-3702, resquell(at)aboundresources(dot)com

For more information on Abound Resources' bank consulting, bank technology consulting, credit union consulting, credit union technology consulting, vendor evaluation services, vendor contract negotiation services, etc., please visit http://www.AboundResources.com

The full survey results can be found at http://www.aboundresources.com/index.asp?p=insight2011-whitepaper

Additional free resources can be found at http://www.AboundResources.com/Library


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