Exhibit 1: Consolidation of assets and deposits
Source: FDIC Quarterly Banking Profile, Fourth Quarter 20162
The 4.1 percent decline in the number of institutions contrasts with the continuing growth in bank assets, which increased by 3.8 percent during the same time period.
In the longer term, the total number of banks has now shrunk by more than one-third since there were 8,680 insured institutions at year-end 2006. The consequence of these opposite trends is inevitable: a greater concentration of assets in a shrinking number of institutions, especially in larger banks. Today, roughly 2 percent of banks hold more than 80 percent of total banking assets and deposits.
Comparable trends are occurring in the credit union industry. According to the Credit Union National Association’s (CUNA) 2017 year-end profile, 5,684 credit unions were operating in the United States as of Dec. 31, 2017. That number is a 3.8 percent decline from 2016. Meanwhile, total credit union assets grew by 6.6 percent during the same time period.3
Cybersecurity is viewed as a critical risk by many financial institution executives, reflecting growing regulatory expectations in this area. In a recent webinar for bank executives sponsored by Crowe, participants were asked to identify the areas of risk that cause them the greatest concern. Cybersecurity risk was by far their number one issue, with 35 percent of survey respondents ranking it as their area of greatest concern. (See Exhibit 2.)
Exhibit 2: Bank executives’ areas of concern
1 FDIC Quarterly Banking Profile, Fourth Quarter 2017, Table III-A (page 7), https://www.fdic.gov/bank/analytical/qbp/2017dec/qbp.pdf
2 FDIC Quarterly Banking Profile, Fourth Quarter 2016, Table III-A (page 9), https://www.fdic.gov/bank/analytical/qbp/2016dec/qbp.pdf
3 U.S. Credit Union Profile, Year-End 2017, Credit Union National Association, page 2, https://www.cuna.org/uploadedFiles/Global/About_Credit_Unions/NationalProfile-D17-Bank(1).pdf
4 “FFIEC Release Update to Cybersecurity Assessment Tool,” Federal Financial Institutions Examination Council news release, May 31, 2017, https://www.ffiec.gov/press/pr053117.htm
5 “Semiannual Risk Perspective,” Office of the Comptroller of the Currency, Fall 2017, https://www.occ.gov/publications/publications-by-type/other-publications-reports/semiannual-risk-perspective/semiannual-risk-perspective-fall-2017.pdf
6 “Supervisory Insights,” Federal Deposit Insurance Corporation, Vol. 14, Issue 1, Summer 2017, https://www.fdic.gov/regulations/examinations/supervisory/insights/sisum17/si-summer-2017.pdf
7 OCC Bulletin 2017-7, "Supplemental Examination Procedures,” Office of the Comptroller of the Currency, Jan. 24, 2017, https://www.occ.gov/news-issuances/bulletins/2017/bulletin-2017-7.html
8 “Technology Service Provider Contracts With FDIC-Supervised Institutions,” Office of Audits and Evaluations Report No. EVAL-17-004, FDIC Office of the Inspector General, February 2017, https://www.fdicig.gov/sites/default/files/publications/17-004EV_0.pdf
9 Tony DaSilva, “The Importance of Third-Party Vendor Risk Management Programs,” Community Banking Connections, 2017 – First Issue, U.S. Federal Reserve System, https://www.communitybankingconnections.org/articles/2017/i1/third-party