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The Calm Before the Storm?
As I am sitting on a plane heading to Denver to attend D.A. Davidson’s Annual Financial Institutions Conference, I am reflecting back over the past decade. It has been just over ten years since the Great Recession. Since that time, we have enjoyed an unprecedented run of economic stability and credit quality. What history teaches us is that things move in cycles and that eventually all good things must end—the only question is when? With the 2020 Presidential election approaching and challenges with healthcare, social security, and higher education, it isn’t impossible to foresee economic change on the horizon.

Living in the Moment
With a still solid economy, it is a good plan to grow your franchise, but also to be mindful of unhealthy concentrations and of taking undo risks. Banking, after all, is a risk-assessment business and managing that risk is always the trick. Lessons learned from the recession should not be forgotten—pure growth needs to be tempered and competitive juices controlled. Enjoying this strong economy wave is a good thing, provided we are mindful of potential changes ahead.

Risks Beyond Credit Risks
While credit risks are low, there are several other risks challenging bankers. Cybersecurity has to be at or near the top of the list. Rapidly changing technology is also a growing challenge and just staying current and competitive in this arena is a must. Branch obsolescence and attracting top talent to a consolidating industry are also concerns. And, lest we forget, we need to be mindful of the many forms of competition coming from Fintech, credit unions, and the like. There are many risks beyond credit quality upon which to focus.

Looking Ahead
These are both exciting and challenging times for banks as the industry goes through a continuing metamorphosis. As we prepare for our upcoming Miller Nash Graham & Dunn CEO Summit on June 3, the focus will be on technology and how to best serve your clients and deliver financial products and services in a timely and cost-efficient basis. As in sports, scoring points (i.e. growth) is often problematic, but playing good sound defense (i.e. efficiency) is a constant needed to keep you in the game.

No doubt, consolidation will continue. However, those who are prepared for a changing future—whether the change is driven by the economy, technology, or increased competition—will survive and thrive. Now is the time, when conditions are good, to invest in the future—be it systems, technology, or people.