American Bankers Association Top Bank Risks for 2025

Fraud remains a persistent and expanding threat for banks, with both cyber fraud and traditional check fraud posing significant risks.

In the below ABA Banking Journal, Top Bank Risks for 2025, Kristina Schaefer, Chief Risk Officer at First Bank and Trust, identifies fraud as her top concern for 2025. She recounts incidents where fraudsters impersonated the bank, leading to compromised customer credentials and stolen funds. The shift to digital banking has increased opportunities for fraud, making it crucial for banks to ensure customers use necessary security tools.

Fraud is often linked with other risks banks face, such as the rapid adoption of new technology and services, typically through third-party vendors. Additionally, banks continue to be challenged with volatile interest rates and regulatory uncertainty under the new administration.

The Top Bank Risks for 2025 discussed in the article are outlined below:

• Third-Party Risks: Banks’ reliance on third-party vendors, and even vendors’ vendors, pose significant cybersecurity risks. Understanding and managing these risks is crucial, especially after incidents like the corrupted software update from a popular vendor.
• New Technology Challenges: Rapid adoption of new technologies, particularly AI, can heighten risks. Banks must consider having robust risk management frameworks to handle these innovations and avoid issues like inadequate internal controls and compliance challenges.
• Regulatory Changes: With the incoming administration, there may be less aggressive pursuit of new rules and enforcement. However, banks should consider remaining vigilant and maintain strong internal controls and compliance measures.
• Interest Rate Volatility: Fluctuating interest rates continue to pose challenges. Banks should consider hedging strategies to protect against unexpected outcomes and manage their investment portfolios effectively.

Effective risk management across all levels of bank operations is crucial to navigate these challenges successfully. Stay informed and proactive to ensure a secure and compliant banking environment in 2025.

Click here to read the full article from the ABA Banking Journal.

Approved Source: American Bankers Association Banking Journal

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