Community Banks Are Bigger Than You Think, and There Is Something They All Have In Common

The size of community banks is growing. In the 1950s, a community bank was thought of as having a single office serving a single community. Today, many community banks have branches, some with 6, 12 or 36 offices, serving multiple communities. And community banks represent 92% of all FDIC insured institutions in the USA.

There is something they all have in common.

Banks of all sizes want secure, reliable, efficient and responsive information technology. A single-location bank should be concerned about having the resources to meet today’s cybersecurity risks. A multi-location bank with 36 branches needs to make a substantial investment in personnel and systems in order to be able to effectively support their branch network. These banks vary significantly, but they each want secure, reliable information technology systems and must meet similar regulatory standards regarding IT.

FDIC Chairman Martin Gruenberg recently spoke at an event about how the rapid pace of technological change was creating new and added risks for banks. Chairman Gruenberg stated that a “significant challenge for community banks is coping with the pace of change in information technology (IT).” Gruenberg also stated that “these challenges include maintaining strong cybersecurity...” along with mentioning that (community) banks have fewer resources to devote to the challenges and risks that IT presents.

This is an issue regulators are looking at for all banks. Gruenberg encouraged bankers to ensure that technology risks are being appropriately managed at the board level.

“During the past couple of years, we have seen all three bank regulatory agencies (FDIC, OCC, FRB) continually increasing what they expect banks to be doing as it relates to the regulatory, financial, reputational and business continuity risks that banks have relating to their information technology systems,” Kathy Malone, SVP at BankOnIT, said.

Malone, who was previously with the Federal Reserve and has worked as a State bank examiner and as a banker added, “Much of this increased focus has been on the CEO and the bank’s directors. Examiners want the board actively managing the bank’s technology risks and doing so at the same level they manage credit risk, liquidity risk and interest rate risk.”

The FDIC, OCC and FRB have significantly increased their efforts to improve awareness of information technology practices and risks with various releases, seminars and tools, such as the Cybersecurity Assessment Tool. However, many times bankers find themselves needing greater capabilities to meet not only regulatory requirements but also to obtain their bank’s strategic objectives.

Do you feel your bank is meeting the regulatory requirements and obtaining the strategic objectives you have set for your bank? We’re interested to hear your feedback. Contact us at 800-498-8877, option 2, or