Dodd-Frank Legislation Putting Added Pressure On Small Banks
While Dodd-Frank legislation was intended to improve the safety and security of banking institutions within the financial industry, it’s also creating struggles. Certain components of this legislation are making it difficult for smaller banks to remain competitive because they put strain on already limited expense structures and profit margins.
As suggested in “Smaller Banks Are Dodd-Frank Losers,” posted by Rob McDonough on CFO.com, smaller banks are struggling under the new Dodd-Frank requirements. Risk management requires all banks to invest in risk management systems to measure and mitigate potential risks. Smaller banks have a smaller earnings base and are struggling to afford the needed risk management infrastructure. Also, the new legislation requires consumer-centric products to be standardized, which puts smaller banks at a disadvantage. Smaller banks have typically offered unique or specialized products, not often found at larger banks, to set them apart from the rest of the competition. Another big requirement is the $10 billion assets threshold that designates banks as mid sized institutions. At this point, additional regulations are required which also bears additional costs and time. Banks have indicated that some pressures arise before they reach this threshold and that it discourages banks from growing or acquiring other institutions.
With or without growth, banks of all sizes can gain greater control and insight over financial operations with the support of a robust enterprise resource planning (ERP) solution. You can use ERP to manage common accounting practices, human capital management and logistics, as well as business analytics. Powerful ERP solutions, including Microsoft Dynamics® ERP, offers Role Tailored dashboards that you can use to monitor financial figures in real-time. Built-in business intelligence and reporting features make it easier to analyze and use your data to make the decisions that can save money, improve productivity, and drive growth.
Don’t struggle to figure out Dodd-Frank and other regulatory requirements. Use ERP to capture and use the data needed for regulatory compliance and sound decision-making. Contact AKA Enterprise Solutions to learn how ERP can take the pressure off by adding control to financial and regulatory management.