Bold Banking Predictions for 2016
December 16, 2015 7:30 AM
Fearless forecasts from BankThink's stable of industry veterans, experts and critics.
Want to Make a Deal?
"With total bank capital at the highest level in many years and bank earnings continuing to recover, I predict that there will be in excess of 400 unassisted bank mergers in 2016. This will be the highest total of mergers since year 2000."
Mark W. Olson, Chairman of Treliant Risk Advisors and former Federal Reserve Board governor
An Even Broader Horizon for Fintech
"There is this notion that the new entrants in fintech are focusing on one thing and doing it really well, a lot better than banks. We're doing it with technology, which gets to be built from the ground up rather than with legacy systems. The question is whether there will be a rebundling of products the idea that fintech branches out to new products to own the long-term customer relationship. And I think the answer is yes. You are starting to see that. You see Lending Club going into small business loans, SoFi going into mortgages, and we expect to go into personal loans in 2016."
David Klein, chief executive and co-founder of CommonBond
Regulatory Relief for the Small, Not the Big
"Presidential campaign politics will mean very strong regulatory headwinds for megabanks while community banks will have the regulatory relief winds at their backs. All of the requirements facing bigger banks will intensify, making it more difficult for them to continue to grow. On the other end of the spectrum, community banks can expect some significant regulatory relief centered around Sen. Richard Shelby's bill."
Camden Fine, president and chief executive officer of the Independent Community Bankers of America
Counterterrorism Takes Center Stage
"Terrorist financing enforcement, having been ignored by financial regulators in favor of anti-money laundering enforcement for so many years, will make headlines in 2016. I think there will be charges and a prosecution from the U.S, or as a joint U.S. initiative with another country, for a significant terrorist financing activity, and I think it'll be a company or a bank and likely will involve ISIS.
I also think that, unlike anti-money laundering charges, directors and officers of [financial institutions] may be charged."
Christine Duhaime, founder and executive director of the Digital Finance Institute
Fintech Product Deals Lead to Other Deals
"Fintech startups will continue to seek bank partners so they can access the banking system, and then will eventually be swallowed up by their partner banks. Banks will continue to capitalize on innovation by buying innovators."
Kevin Tynan, senior vice president of marketing at Liberty Bank in Chicago
U.S. Regulators Catch Innovation Bug
"Taking a cue from their U.K. counterparts, U.S. regulators will get serious about innovation and finding ways to balance it with both consumer protection and safety and soundness. While they likely won't go as far as the British principles-based system, they will explore the creation of an innovation sandbox for both incumbent banks and fintech startups."
Jennifer Tescher, chief executive of Center for Financial Services Innovation
Sharper Decline in Bank Charters
"In at least one quarter of 2016 and quite possibly the entire year the industry will see for the first time the number of bank charters shrink on an annualized basis by more than 6%. As a result, investor interest in the banking sector, and most specifically in smaller regionals and larger community banks, will spike to levels not seen since well before the financial crisis."
Richard J. Parsons, former executive at Bank of America and author of Broke: America's Banking System.
The User as the Platform
"It's not the branch or physical [point of sale] that matters. It's the consumer. The combination of their personal data points
combined with their mobile or wearable becomes the focal point. The shift to the consumer as the central hub in the real world instead of brick-and-mortar bank branches and retail outlets is complete. We already have seen the shift in retail. We will continue to see this with banking activities and payments moving more and more online."
Sam Maule, emerging payments practice lead at Carlisle & Gallagher Consulting Group, Inc.
The Return of Systemic Shockwaves
"The failure of a large nonbank financial company perhaps a hedge fund or private equity fund in 2016 will threaten the stability of one or more major banks. As was the case with Long-Term Capital Management in 1998 and Bear Stearns, Lehman Brothers and AIG in 2008, that failure will again show us the dangers of close linkages between shadow banks and large global banks."
Arthur Wilmarth, law professor at George Washington University
More Banks Hit for Fair Lending Violations
"Recent Supreme Court and regulatory decisions will inject new life into fair lending discrimination cases by the government based on disparate impact allegations, further enlarging the scope and reach of the doctrine."
Thomas Vartanian, partner at Dechert LLP
Rise of the Data Specialist
"2016 will be the year that bank knowledge workers with expertise in the use and analysis of data to gain insight will begin to replace in significant numbers old-style bank knowledge workers who do not possess these skills. Strong data skills are needed throughout all areas of the bank."
David Gerbino, a fintech consultant and former community banker
Banks Set Sights on Online Lending, Robo-Advisors
"On the lending side, I expect alternative lending platforms focused on [small and medium business] credit to continue to grow, forcing banks to scramble and sign strategic partnerships with the leading platforms.
As some wealth management robo-advisors struggle to break out growth wise, I fully expect banks with a retail and wealth management presence in the U.S. to scoop up certain assets via acquisitions or captive partnerships."
Pascal Bouvier, a fintech expert and investor in early stage and growth stage financial services and financial technology firms
Mobile Wallets Are Just the Start
"2016 will be about mobile wallets and leveraging what mobile can do at the point of sale. You've already got Samsung Pay, Android Pay, Apple Pay, Chase Pay, and a host of other players out there. But at the moment, banks and mobile operators haven't really understood what the wallet and pay system can do. That will start to mature next year into contextual models that incorporate advice, sales and marketing."
Chris Skinner, author of "Digital Bank"
