Members of the Federal Reserve’s Community Depository Institution Advisory Council flagged cybersecurity threats—particularly related to ransomware—as a top threat facing community banks during a recent meeting, and noted that “a framework needs to be put in place that encourages cooperation and reduces risks of transparency (which currently is seen as leading primarily to punishment and reputational damage).” Council members added that the framework should require closer collaboration between regulators and the industry.
The council also highlighted challenges that community banks face to remain competitive with nonbank fintech firms, noting that “regulators could help [community depository institutions] by promoting truth in advertising by fintechs, especially when fintechs purport to be banks or offer services intended to usurp banks at the expense of safety and soundness and consumer protections.”
The council also addressed current banking and economic conditions, examination practices and regulatory matters.
