DALLAS, TX.- October 23, 2024 - Endurance Advisory Partners announced today that The First National Bank of Central Texas (FNBCT), headquartered in Waco, Texas, has completed implementation of an Enterprise Risk Management (ERM) Program under the firm’s guidance.

The role of payments as the new connective tissue in the physical and digital economies is one of the most significant evolutions of the 21st century. The last decade was about connecting the world with internet and mobile communications and the resulting fintech and software revolution. The world is essentially online, and barriers to entry for new digital business models no longer exist. Winners of the future will be those who “connect the connected” and the interoperability between platforms with safe, efficient and reliable data transfer will define the future. Payments as the value exchange is the solution to this interoperability challenge between platforms and is at the heart of our exciting digital future.

Fiserv will have more wherewithal to undercut competitors on price after the payments processing giant obtained a special bank charter in Georgia this month, consultants who follow the payments industry said. Milwaukee-based Fiserv partners with banks to process credit and debit card transactions for merchants. The Georgia Department of Banking and Finance announced Oct. 4 that it was giving the payments company a merchant acquirer limited purpose bank charter on a conditional basis, allowing it to process those transactions without a partner bank.

Cross River Founder and CEO Gilles Gade has spoken out in favor of the Federal Deposit Insurance Corp.’s (FDIC) proposed requirements for custodial deposit accounts. The proposed requirements are a proper response to the collapse of Synapse and the fallout that impacted its FDIC-insured banking partner, Evolve Bank & Trust, and several FinTechs, Gade said in a Tuesday (Oct. 22) statement. “In the past, we’ve been the first to push back on regulator overreach,” Gade wrote. “But on this occasion, regulators at the FDIC are undeniably right to take responsive action.”

The Bank Policy Institute, the Kentucky Bankers Association and Lexington, Kentucky-based Forcht Bank filed a lawsuit Tuesday in the U.S. District Court for the Eastern District of Kentucky, charging the CFPB with overstepping its authority and asserting the rule would put consumers and the banking system at risk.

BaaS relationships are on regulators’ radars, resulting in enforcement actions, especially against smaller banks that are operating with FinTech partners to issue cards and enable other banking-related services.

The convergence of atomization, embedded finance, and real-time capabilities is leading to more personalized financial products, more efficient capital allocation, and enhanced customer experiences. Accelerating digital transformation is a critical step. Banks must adopt flexible and adaptable digital technologies to improve operational efficiencies and meet evolving customer demands.

State regulators urge the FDIC to refrain from adopting a new change of control rules. The proposal would create unnecessary regulatory redundancies and uncertainties for active investors, passive investors, and their state nonmember banking organization targets, and could make it more difficult for state nonmember banks with a parent holding company to access capital.

The revised OCC and FDIC Statements of Policy, OCC Final Rule, and the DOJ’s transition to the 2023 Merger Guidelines signal a tangible change in the regulatory landscape for bank mergers (subject of course to a change in administrations in Washington, D.C.). Bank integration plans may face increased regulatory scrutiny, unpredictability, and hurdles to completion.

The use of MFA for NPI will be mandatory in 2025, and NYDFS recommends that companies use authentication methods that can’t be faked using AI, including digital-based certificates and physical security keys. NYDFS also expects companies to increase cybersecurity protocols and third-party oversight, all of which is based on entities’ required cybersecurity risk assessments and detailed further in the Guidance. These are likely previews to additional federal guidelines in these areas.

Banks with “weaker” marked-to-market capital levels tied to losses in their securities holdings are the primary vector for the CRE mortgage extensions. Extending the maturity of these troubled loans has made it harder to make new CRE loans and increased the chances that troubled CRE mortgages will face an imminent, and potentially sudden, reckoning, noting “the maturity extensions granted by banks also fueled the volume of CRE mortgages set to mature in the near term--a ‘maturity wall’ with the associated risk of large losses materializing in a short period of time.”

Over the past decade, the mortgage industry has undergone a significant technological shift as lenders replace manual processes in favor of automated workflows...To position themselves for success in this rapidly changing market, it is critical that lenders take proactive steps to protect their operations from implications associated with these technological transitions.

Jewelers across America are being hit by a string of sophisticated “Ocean’s Eleven”–style break-ins, and they’re suffering big losses as a result.

Mickey Levy (former BofA Chief Economist) and Shadow Open Market Committee member. Interesting background on how the SOMC impacts FOMC decisions, and how their commentary and analyses influence FOMC thinking.

Banks remixing their balance sheet, with low yielding investments jettisoned in favor of higher yielding investments, and unrealized losses are declining.

The Consumer Financial Protection Bureau (CFPB) released the final version of the Personal Financial Data Rights Rule that requires many financial institutions, credit card issuers, and other financial service providers that facilitate payments (including mobile wallets and payment apps) to support new open banking standards and make account records accessible and portable.

If the new regulatory wave is rocking your boat, the Hoover Institute economists' prescription to end bailouts and bank failures is an interesting read (summation on page 190). Essentially 1) raise Tier 1 capital requirements to 16%, 2) tax short-term funding, 3) end deposit insurance, and 4) vastly simplify/eliminate regulation for banks with over 16% Tier 1 capital. If we see a change in Administration, this topic will come up.

Whichever party wins the White House, the outcome will be a mixed bag for the banking industry. While a Harris win will likely mean more of the same, Trump's ability to impact the regulatory agencies is unknown, and closely impacted by which party wins the House and Senate. Meanwhile key Supreme Court decisions have reformed the regulatory playing field...