Independent Banker - July 2023 - 55

Pieniazek explains. " It's just taking
a look at a credit file of the borrower
and loan to see what has changed. "
On the consumer side, banks might
keep a close watch at the collateral
and other protections they have in
place so they can properly prepare if
a loan or loans go sour, Hui says. For
credit card customers, community
banks might consider a reduced line
of credit, for example.
RISK
CYBERSECURITY RISK REMAINS
A TOP CONCERN.
Cybersecurity risk was cited by 72% of
banks polled in Wolters Kluwer's most
recent study. It's certainly a pervasive
problem as breaches of all kinds
continue to compromise consumer
data, increase the risk of damaging
lawsuits and test the limits of all
businesses' security practices.
SOLUTION
Outsourcing strategically is one
solution to the challenge of evolving
threats and keeping up with the
technology necessary to run the
institution, Malzahn says.
Community banks have the option
to outsource the core system to the
core provider. They can also outsource
the internal network management to
an IT-managed solutions provider that
will handle both level 1 PC support as
well as the high-end technology.
Then, the IT director or CIO can
focus on managing the IT security
program, the IT strategic plan
(which should support the bank's
business plan) and collaborate with
other departments to implement the
customer technology products and
services needed to support customers'
needs, she says.
Ongoing education for employees
and customers is also important.
New threats and techniques evolve
all the time, so staff and customers
need reminders, Hui says. A once-ayear
refresher training isn't enough,
especially as these threats continue
to evolve.
From a vendor management
perspective, it's also important to
assess vendors for cyber risks on an
ongoing basis. Notably, an annual
review may not be enough; frequent
checkpoints could mean the difference
between a small headache and a major
one. " Information security is not just
within the bank's four walls; it's part
of our ecosystem, " Hui says.
RISK
UNCERTAINTY MAKES IT DIFFICULT
TO ASSESS LIQUIDITY RISK
As the economy ebbs and flows,
uncertainty can be acute and
must be taken into account when
managing liquidity.
SOLUTION
In managing liquidity, one
strategy is to find ways to improve the
management of the deposit base.
" Never lose sight that core deposits
are what builds real value, so anything
[community banks] can do to cement
those relationships is a huge positive, "
says Randy Dennis, founding
partner of DD&F Consulting in Little
Rock, Ark.
He notes that given the recent large
bank failures, community banks may
have received calls from concerned
businesses and consumers asking, " Is
my money safe? "
Pay close attention to those
customers' concerns. For instance,
community banks can help their
customers seek extra protection for
their funds by retitling accounts, or
they can use third-party providers
to distribute funds among multiple
institutions, while still maintaining
the customer relationship.
As Dennis says, " The customer
doesn't know who has it; they just
know it's all insured. " 
Cheryl Winokur Munk is a writer in
New Jersey.
independentbanker.org // 55
http://www.independentbanker.org
Independent Banker - July 2023

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