Hardly a year goes by without major events, whether geopolitical, financial, or something completely unanticipated like a global pandemic, that dramatically impact financial markets, the economy, and banks. Last year was no exception, and 2024 is on track to remain a challenging environment — even without any completely unexpected surprises.
The collapse of Silicon Valley Bank and two other large banks in early 2023 put a spotlight on interest rate risk management. The suddenness and severity of their fall ramped up investors’ and regulators’ scrutiny of banks across the sector and the risks they face, likely a factor in the drumming bank stocks have taken since. Meanwhile, banks were already dealing with significant risks, including cyber attacks and fraud, depositors shifting funds to higher-return investments, and the effects of the pandemic on both their investment and loan portfolios. Rather than finding resolutions, those risks only seemed to grow last year and become more complex.
That trend is clearly continuing into 2024, with risks such as cybersecurity amplified by the rapid adoption of artificial intelligence and in particular generative AI technologies. The greatest worry expressed by bankers and experts, however, appears to be onslaught of regulatory changes. Even those not going into effect well after 2024 are likely to keep bankers up at night in the year ahead as they analyze the potential operational and strategic impacts and how to address them. “The biggest stress is what’s on the horizon, more than what bankers are dealing with immediately,” says ABA EVP Ginny O’Neill.
Click here to read the full article from the ABA Banking Journal, Compliance and Risk
Approved Source: American Bankers Association Banking Journal
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