The Farm Credit System fills a unique and specific role within the financial services ecosystem—supporting the continuous credit needs of U.S. farmers, ranchers, producers, and their rural communities. Along with the rest of the financial services industry, the Farm Credit System has been evolving, adopting technology, managing risks, and partnering with those that strive to innovate how they do business.
While Farm Credit operates differently in certain aspects, the hyper change that the commercial banking industry is going through—especially in the risk and regulatory space—will ultimately find its way to Farm Credit.
Farm Credit needs to be ready for this continued shift in focus and proactively prepare for the changes to come, including:
The cybersecurity risk management rule, which proposes revisions to 12 CFR Part 609 of the information technology regulation, will require Farm Credit associations to conduct an annual risk assessment and develop a detailed cyber risk plan approved by their board to address identified risk and vulnerabilities.
Amendment 1071 to the ECOA impacts “covered institutions,” Farm Credits and banks alike, lending to small businesses and thus requiring them to collect additional application data about demographics and then submit specific reports to examiners. To do this, associations will need to be able to answer questions like these:
In addition to heightened reporting requirements for small business credit applications, there will also be further reporting changes around the Young, Beginning, and Small Farmers (YBS) program. Associations can expect their funding bank to be more involved in reviewing YBS progress as the proposal to 12 CFR parts 614 and 620 will require associations to have an independent strategic plan with metrics to measure progress.
Do you have a documented strategic plan in place to concisely communicate how your association is supporting and measuring progress with YBS? Have you considered collaborating with other associations and leveraging shared technology to foster and support your strategy?
Is your association ready for the coming changes and shift in regulatory environment? And how can you create opportunities out of these?
Having worked closely with Farm Credit associations nationwide, we possess a deep understanding of the unique challenges and opportunities that the Farm Credit System encounters. Our combination of specialized insights and extensive experience in commercial banking positions us well to assist in addressing imminent risk and compliance challenges. Our goal is to support Farm Credit in effectively navigating the evolving regulatory landscape—ensuring a secure and compliant approach that aligns with its mission.