NEW HAVEN, Conn. -- New analysis from Continuity Control suggests that amid the spectacular rise of regulations, half of the nation's 7,000 community banks are barely surviving today.
Through examination of FDIC data, Continuity Control, a financial technology company built to help community banks and credit unions meet their growing compliance requirements, has determined that the rise in operating expenses for smaller banks is greatly complicating their ability to achieve an acceptable Return on Assets (ROA).
The firm reports that these banks were forced to deal with 157 rule alerts issued in just the last year, 58 of which came down in the last six months. All together, the analysis shows 762 rule alerts were issued by the individual regulatory agencies over the last five years, with hundreds of subsequent updates.
Continuity Control has added more than 100 new controls to its platform since the beginning of the year in effort to help community financial institutions keep pace. According to Andy Greenawalt, the firm's Co-Founder and CEO, the costs attached to the rise of regulatory requirements are pushing the majority of community banks to a 'compliance tipping point.'
"Without a dramatic improvement in efficiencies for handling regulatory compliance or a sudden drop in regulations, we could see 2,000 bank failures across the U.S. over the next few years," said Mr. Greenawalt. "I believe the community banking industry, which serves as the backbone of communities across the country, is under real threat.
"Continuity Control's analysis of FDIC data also indicates that a "broad swath" of the worst performing banks must move quickly to reengineer their operations to function with reduced overhead and an efficient regulatory operations platform.
"With a new plan of attack and the right technology, executives willing to make hard choices about change can improve their banks' efficiency ratios," says Mr. Greenawalt, "to the point that they're competitive with the megabanks. A necessary element of that improvement will be the ability to operate in this complex regulatory environment with minimal overhead.
"The only complete compliance platform for community financial institutions, Continuity Control was recognized as one of the five most interesting companies in financial services at FinovateSpring 2010 and recently named among the "10 Tech Companies to Watch" by Bank Technology News. About Continuity Control Continuity Control is an award-winning compliance solution that combines advanced software with personalized service to help community financial institutions effectively manage their regulatory burden. Founded in 2008 by distinguished technology, banking, and compliance specialists, Continuity Control's solution effectively reduces the resources a bank or credit union must spend on compliance while ensuring that it passes regulatory muster. Built just for community financial institutions, Continuity Control is the most comprehensive compliance management platform on the market today for community financial institutions. For more information, visit www.continuity.net.
Continuity provides the Compliance Core™ for community banks and credit unions, comprising a blend of strategic planning services, regulatory expertise and assurance services - all delivered using a control platform continuously updated with the latest regulatory data and best practice compliance processes.