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Community Bank Executives Are Very Concerned About Cybersecurity

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Security breaches at big financial institutions may dominate the headlines, but a new survey from the Conference of State Bank Supervisors found that executives at local community banks are just as concerned about the risks cybersecurity poses to their business.

The survey of 571 community banks in 37 states found that approximately 70% of respondents consider cybersecurity their firm’s top risk, ahead of such concerns as liquidity and regulation.

Approximately 71% of respondents also said the adoption of new or emerging technologies is important or very important, though in a bit of irony, the number of community banks and credit unions offering digital and online services remained largely unchanged from last year’s survey, with costs cited as the chief factor.

Cybersecurity is not a new issue. Technology executives are concerned, as are big financial institutions. But local community banks are uniquely exposed, experts say, specifically because of their smaller size.

"A hacker might consider a community bank to be less protected from a cybersecurity threat than a large enterprise firm,” said Darren Conte, founder and CEO of Siftsort.com, a secure document storage and messaging platform. “Reputational damage could affect a smaller community bank much more than a top-tier bank serving various global markets.”

Speaking at a recent community bank virtual investor conference, Community Bank Expert Tim Melvin said that cybersecurity and its associated costs need to be a very real consideration for local banks and investors alike.

“It’s a serious problem and it’s an expensive problem for the industry,” said Melvin. He cited a report from ITSP Magazine that found 28% of customers who left their community banks in 2016 left due to a cybersecurity breach, while 12.3% of credit union customers who left cited cybersecurity as the reason for leaving. “[Cybersecurity compliance] is very difficult for small banks.”

Conte, a former Goldman Sachs executive, said smaller cybersecurity budgets will not excuse community banks from a data breach in the eyes of customers, and they will have to make it a priority investment for the indefinite future.

“Their budgets may vary, but regardless of size banks need to have similar priorities when managing risk."

 

 

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Posted-In: community banks Cybersecurity Darren Conte data breach Siftsort Tim MelvinNews General

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