In a new report from Aite Group, LLC analysts share the top 10 trends that they expect will shape the banking industry in 2010, in North America and beyond. After two years of economic turmoil, the banking industry will get back to the basics of its business, engaging in more long-term planning and rebuilding and less panic-driven firefighting.
Political, regulatory, and economic forces have put pressure on the business model of U.S. banks to evolve or fall behind – pressures that impact every facet of the banking and payments arenas. The space is simultaneously experiencing changes in credit card-issuing practices (Credit CARD Act ), stricter overdraft regulation (regulation E), overall scrutiny and political pressure regarding bank fees, political and regulatory pressure against payday lending and any form of alternative financial services, merchants’ lobbying for interchange regulation, the prospect of sustained high unemployment around 10% in the foreseeable future, the deterioration of creditworthiness of large swaths of consumers and small businesses, and regulators’ pressure on banks to raise their capital ratios. These converging pressures will result in a very different banking landscape.
“In 2010, bankers need to take a hard look at their business model and find new ways to generate revenues,” says Gwenn Bzard, research director with Aite Group and co-author of this report. “While the jury is still out on whether or not merchants will succeed in curbing the interchange revenue stream, for example, the industry will have to address the loss of key sources of income in 2010.”
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