Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Key Findings from Bank Director’s 2024 Risk Report
Report | Jun 18, 2024
Image: 2024 Risk Survey, Bank Director report
Summary of 2024 Risk Survey for Financial Institutions and Insights for Fintechs
The Bank Director's 2024 Risk Survey highlights numerous rising risks and issues that banks and financial institutions are facing as a result of developing regulatory and economic situations. Below are some important areas of concern applicable to the financial sector for review
1. Regulatory and Compliance Risks
- Increased regulatory requirements are a major worry for financial organizations.
- Over 75% of executives are concerned about regulatory risks, compared to 66% last year.
- New restrictions and monitoring, like the Community Reinvestment Act, have significantly contributed to this worry.
2. Margin Pressures and Profitability
- Net interest margins (NIMs) have tightened dramatically, with 78% of bank leaders reporting lower profits, up from 26% the previous year.
- Rising funding costs are creating profitability issues, particularly for community banks. NIMs decreased by 10 basis points to 3.17%, putting pressure on profitability.
- The ratio of unprofitable community banks increased to 5.2% at the end of 2023, up from 3.5% the previous year.
3. Deposit Retention and Liquidity Management
- Rising interest rates have caused some deposit losses, with 59% of banks reporting low to moderate affects on their funding base.
- Banks raised deposit interest rates and borrowed from Federal Home Loan Banks to address liquidity risk concerns (76% increase).
4. Supervisory Exams and Compliance
- Following the Silicon Valley Bank bankruptcy, many banks underwent tighter regulatory inspections, indicating increasing supervisory caution.
5. Strategic Challenges and Risks
- 64% of directors and bankers see deposit pricing as the most important strategic problem for the next 18 months.
- Inflation, interest rate volatility, and geopolitical uncertainty continue to pose risks to the industry's credit quality, profits, and liquidity.
Image: Bank Director 2024 Survey, Risk Heatmap
Opportunities and Insights for Fintechs
- Fintechs should create strong and agile compliance frameworks to effectively traverse increased regulatory scrutiny.
- Given the tremendous pressures that traditional banks face, innovative solutions that optimize net interest margins may be useful.
- Strategies for increasing client loyalty and managing deposit retention in a high-interest environment are critical.
See: Climate Inflation Discussion for a Sustainable Future
- Providing improved liquidity management tools could help financial organizations reduce the risks associated with fluctuating interest rates.
- Implementing cutting-edge technologies for risk management, regulatory compliance, and operational efficiency can provide fintechs a competitive advantage.
Outlook
As regulatory pressures increase and economic conditions shift, financial institutions must improve risk management and operational efficiencies. This environment is a tremendous opportunity for fintechs to innovate and offer solutions to these crucial issues.
See: RBC and Rogers Cybersecure Catalyst Launch New Fintech Incubator
Fintechs can position themselves as important partners for banks navigating this challenging situation by focusing on compliance, customer retention, liquidity management, and the use of sophisticated technologies. Those who can respond quickly and strategically to emerging threats and opportunities will help define the financial sector's future.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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