In our second annual IT outlook report, we surveyed community banks and credit unions to better understand their current IT situations, top IT priorities and challenges, security and compliance issues and to get an idea of key technologies and investments they plan to make in the year ahead. The data collected in our 2018 report analyzes survey feedback on 54 questions from approximately 110 respondents representing a range of community banks and credit unions across the country with asset sizes from $100 million to more than $1 billion.
One big difference to note is this year marks the first time that the survey includes responses from credit unions. The survey shows that both credit unions and community banks are experiencing many of the same issues related to compliance, IT challenges and staffing constraints.
Five highlights from the 2018 Community Bank and Credit Union Information Technology Outlook reveal the following:
- Cybersecurity and Information Security Continue to Challenge Financial Institutions
Cybersecurity remains the greatest security challenge banks and credit unions foresee for the year ahead according to 80% of survey respondents. Information Security continues to be a top challenge for community financial institutions, according to 81% of survey respondents, which has led to 74% of survey respondents claiming they have increased their IT-related security spending in the past 18 months.
Compliance Continues to be “Top of Mind”
Managing strict, ever-changing government regulations and guidelines is the greatest IT compliance challenge today for 32% of survey respondents. This has led approximately 40% of respondents to outsource their compliance needs. In addition, preparing for an exam has become a time consuming task as agencies are requesting more and more documents and reports before the exam even begins. According to survey results, approximately 60% of respondents have been asked to prepare more than 40 items for each exam or audit.
- IT Staffing Struggles Continue
For the second consecutive year, personnel resource restraints and in-house expertise are cited as significant pain points for many financial institutions. According to the survey, approximately 31% of respondents have only one employee in their IT department and 26% have just two IT employees, emphasizing that many community banks and credit union’s IT departments continue to be understaffed.
- Outsourcing Continues to be Beneficial
With limited internal resources and expertise, community financial institutions continue to augment their IT departments with outsourced service providers who are able to help them navigate the IT changes and meet examiner expectations. According to survey results, 76% of respondents outsource the management of their IT network to a technology service provider. 86% of bank and credit union respondents outsource their security monitoring, given the increase in security breaches the industry has seen this past year.
Technology Investment Continues
Community financial institutions continue to recognize the need for investing in new technologies and services. Nearly 81% of survey respondents claim their technology spending has increased in the past 18 months.
Other areas the survey focused on include IT management issues, audit and exam preparation, additional technology challenges, vendor management, business continuity planning, reasons for change and implementation of new services and cloud usage. The complete report provides executives with peer-to-peer information to better understand the current IT environment within community banks and credit unions nationwide, while also helping improve decision making within their own institution in 2018 and beyond.
To gain more insights into the key challenges, goals and opportunities facing community financial institutions today, please download the full report here.