Fed Announces 50 Basis Point Rate Hike 

In a significant move yesterday, the Federal Reserve announced that it will increase the target range for the federal funds rate to 0.75 to 1%, and signaled that “ongoing increases in the target range will be appropriate.”

“Assuming that economic and financial conditions evolve in line with expectations, there is a broad sense on the committee that additional 50 basis point increases should be on the table at the next couple of meetings,” Fed Chairman Jerome Powell said in a press conference following the announcement, though he noted that 75 basis point hikes were not currently being contemplated by the Fed. “We will make our decisions meeting by meeting, as we learn from incoming data and the evolving outlook for the economy.”

Despite a decline in first quarter economic activity, however, Powell maintained that “underlying momentum remains strong.” He added, however, that “inflation is much too high,” and that “it is essential we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all.” Read more.

ABA Foundation, FBI to Host Webinar Series on Scams Targeting Older Adults

The ABA Foundation, together with the Federal Bureau of Investigation and other industry partners, will host a free, three-part webinar series throughout the month of May to provide information about fraud and scams targeting older Americans. This series aims to show you what fraud against older adults looks like, why criminals are targeting older adults, and how we can work together to keep older adults safe.  As May 15 is National Senior Fraud Awareness Day, ABA's Elder Justice events in May will focus on financial frauds that impact older adults. The first webinar in the series will take place on Monday, May 9 at 12 p.m. CDT, and will feature FBI Special Agent Jamie Daly, who will share a deep dive into one of her investment fraud cases involving numerous older victims, including one who was diagnosed with cancer and was struggling to pay her medical bills due to this fraud. Another victim lost his business, his home, and everything he had. Learn how one woman stole $5.4 million from 40 victims while she traveled the world and lived a life of luxury.

The webinar is open to everyone who'd like to attend. If you have questions, email [email protected]. 

ABA offers resources for banks to help educate consumers on elder fraud and other scams through its Safe Banking for Seniors program. Click here to register.

Payments in 2022: What you need to know

Financial institutions have had a lot to grapple with—from consumer payment habit changes to addressing the issues they had pre-pandemic, and not least the need to modernize their payment solutions to support new payment methods and rails. Two themes, in particular, are being discussed at every bank—cloud and real-time payments. In a webinar with Alacriti, Gareth Lodge, Senior Analyst, Global Payments at Celent discussed how banks should approach this opportunity to be at the forefront of change.

Changes from 2020
2020 changed where we do business and how we pay for things—which changed the revenues of banks dramatically. The revenues for the Coalition Transaction Banking Index showed that cash management was hardest hit. This resulted in significant pressure to cut costs and find new sources of revenue.

Celent did a large global survey (The State of the Nations for Payments Modernization) on 200 banks in different countries. The chart (below) of the survey results shows how banks responded when asked how COVID-19 impacted their investment in payments technology. By late May 2021, 22% of U.S. banks reported IT spending remained on hold, with another 23% seeing their budget priorities changed.

Banks were finding that some of their digital processes weren’t as digital as they assumed they were (e.g., the ability to allow customers to open and close bank accounts remotely). So they went into 2022 with a backlog of items that should have been done over the last two years, and an increasing list of things to do because of the last two years.

Wire Modernization
Wire modernization is well under way for every region—except the U.S. Twenty percent of U.S. banks reported that they had no plans to update their wire platform. Because of the SWIFT MT to MX conversion, more than 9,000 banks globally had to migrate to that new platform to be compliant with ISO 20022 standards. Real-time payments go hand-in-hand with updating the wire plan. Lodge recommends that in 2022, financial institutions start with wires. “There’s been an awful lot of pressure from banks in the U.S. and other countries around the world to say the U.S. can’t afford not to upgrade its wire system in line with the rest of the world. They will be the only major economy globally that hasn’t.”

Modernizing the payment platform prevents issues with truncation between banks at different stages of their migration. According to Lodge, “There’s no point in the rest of the world sending a data rich message and then reaching a U.S. bank and having to be truncated. We’re losing a large part of the value of the migration.”

U.S. banks should also consider that even European banks who were already doing ISO 20022 for ACH payments for a decade are struggling with the migration. It’s a difficult process with old technology, and there is also the added pressure of a firm timeline. The American Bankers Association told the Federal Reserve in January 2022 that it supports their plan to migrate to ISO 20022 standards for their real-time gross settlement system (RTSG), and that a single-day switch should happen no earlier than November 2023. While 55% of banks have said they are updating wire systems now or over the next five years, the 20% who have no plans at all do not have a lot of time to respond to this.

There is a great synergy between a wire replacement and a real-time payment. They’re not the same, but it’s better to get a system that can do both with an extra spend than going with two completely different systems. There’s an opportunity to piggyback one opportunity on the other. Read the full report here.

Binance backing for Musk bid emboldens crypto visionaries' dreams of a 'decentralized' Twitter

Speaking of Crypto...Register for Demystifying Crypto Webinar - May 9 & 10 

If you haven't registered for the Demystifying Crypto Webinar, don't miss out! We've put together a panel of distinguished and dynamic experts to help lift the veil on all things crypto. Everything from Crypto 101 to risk management, legal and regulatory issues, and compliance will be covered.

Our distinguished panel of speakers includes Michael Felch, Data Analytics Consultant with Eide Bailly out of Fargo, ND; Bret Afdahl, Director, Division of Banking in Pierre, SD; Brooke Ybarra, Vice President, Innovation Strategy, ABA in Washington, DC; Tracy A. Kennedy, Partner at Zimney Foster P.C. and NDBA General Counsel, Grand Forks, ND; Kristina Schaefer, Chief Risk Officer, General Counsel, First Bank & Trust, Sioux Falls, SD and SDBA Board Chair; and special guest, Sultan Meghji, Former Chief Innovation Officer, FDIC , Washington, DC. SDBA President, Karl Adam, will wrap up the webinar on Tuesday, May 10.

The Zoom link will be sent out on Friday, May 6. Click here to register.

World Password Day - May 5

Last Call: Service and Memorial Awards for Annual Convention, Deadline Friday, May 13

And Speaking of Annual Convention...Register Today for the NDBA/SDBA Annual Convention

Join North and South Dakota bankers, June 14-15, for an incredible convention in Bismarck, as the community celebrates 150 years. We will be reminded in all of the best ways why we do what we do, why we do it together, and why we are grateful to make a difference in our hometowns throughout the Dakotas. A dynamic convention program awaits with many top-of-mind topics: leadership, employee retention, the economy, cryptocurrency and cybersecurity. The challenges of today create opportunities for tomorrow. As generations before us blazed trails, let’s gather together and continue to shape the future. Onward!

The full schedule and registration information can be found here.

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933 or email [email protected] and ask for our Membership Team.

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Contact Natalie Likness, SDBA, at 605.224.1653 or via email.