Risk management in banking has largely been focused on compliance with regulations and standards in recent times. This practice primarily stems from the regulations and culture that emerged during the global financial crisis that took place around 2007. The aftermath of this crisis revealed that banks took on excessive risk, along with framework shortcomings and inadequate capital.  These structural changes in the industry aimed to increase stability and transparency in the banking industry.

The Committee on the Global Financial System examined tendencies in bank business models, statistics, and market structure, then assessed the implications on the stability of banking markets. We’ll briefly cover current regulations, points of focus, and expected changes.

Regulatory Changes

The reformation of the banking industry included changes that would strengthen bank resilience. This was made possible by some of the following key changes:

  • Increasing both the quality and quantity of capital.
  • Implementing a global framework for bank recovery and resolution.
  • Sensible management of liquidity risk.
  • Stricter measures for systemically important banks, such as higher capital buffers.

Regulations that apply to banking include the following:

  • Consumer Financial Protection Bureau (CFPB) Bank Regulations
  • Federal Deposit Insurance Corporation (FDIC) Banking Regulations
  • Federal Emergency Management Agency (FEMA) Banking Regulations
  • Federal Financial Institutions Examination Council (FFIEC) Banking Regulations
  • Federal Reserve Board (FRB) Banking Regulations
  • Federal Trade Commission (FTC) Banking Regulations
  • National Credit Union Administration Banking Regulations
  • Office of the Comptroller of the Currency (OCC) Banking Regulations
  • Department of Justice (DOJ) Banking Regulations
  • US Department of the Treasury Banking Regulations

You can learn more about the regulations here.

Banking Focuses

Quality analytical data

A challenge banks face is ensuring accurate and quality analytical data. Without this accuracy, risk data becomes useless. New data is always emerging, so banks need to focus on monitoring data quality on an ongoing basis to ensure data being used is accurate. Banks should also seek to utilize diverse sources of data, validating data with external data received from other sources. Data is crucial not just for assuring compliance with regulations and reporting purposes, but also to aid in business decision-making.

Meeting Customer Expectations

As customers gain more of a platform, their expectations increase as well. Large in part due to technological advancements such as email and social media, as well as increased ease in switching service to a competitor, customer appeasement has moved to the forefront. In an effort to appease customers and prevent reputational damage, banks dedicate entire teams to customer satisfaction. These teams research how to increase usability in banking apps and services, process complaints, manage reviews, etc.

Some of the ways banks are working to appease customers while they improve operations and stay competitive include automating responses to credit decisions that may occur in a retail store or through an online business. Websites allow quick and intuitive account creation and support access. Even depositing checks has evolved, allowing users to simply take a photo of the check through their banking application.

Developing and Protecting Technology

Banking is a data and information-intensive industry. As such, technological innovation offers an opportunity for better data analytics and operating efficiencies. Increased computing power results in better credit decisions, market predictions, financial crime detection, etc. Machine learning, for example, can identify nonlinear patterns in data that may otherwise be difficult to analyze and many believe these models will soon be used for regulatory capital purposes.

Collectively, these innovations can reduce risks and offer an advantage to banks that focus on development. However, this same technology and dependence on automation open banks up to a plethora of cyber and data security risks.

Expected Changes

Just as quickly as the industry has changed in the last 15 years and continues to change, we expect further changes soon to come that continue to focus on strategic planning, increase stability, and meet customer expectations.

One of the primary changes includes fully automating functions and processes to reduce error and increase productivity. An example is the loan process of gathering customer information, providing an estimate, processing, underwriting, and closing. This also removes bias from decisions and moves in line with regulatory requirements. As profits decrease, banks are looking to cut costs, and reducing the manual labor required to review many processes will save money, especially when considering the possibility of increasing accuracy and reducing correctional efforts.

We also suspect many banks will focus on implementing and fostering a risk-aware culture that places emphasis on communication, transparency, and data. This includes a strong risk-management focus that includes identifying and mitigating risk in all job functions.


As we mentioned, automation is and will continue to become a crucial component in banking. Utilize RiskWatch software to automate key functions in risk management such as data collection, communication, reporting, and analysis. Gathered data is accurate and helps make informed decisions, as well as prove compliance to the numerous banking regulations and standards.

The RiskWatch platform also serves as a central repository, storing not only assessment data, but company policies, processes, and other documentation that needs to be secured offsite or easily accessible.

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