Let Your Imagination Run Wild
Bankers as a group are not typically thought of as a wild and crazy bunch, except maybe at a conference bar. Nor are we thought of as being imaginative, but I was just reading an article about Umpqua Bank's former CEO Ray Davis and the digital banking subsidiary he now runs called Pivotus. The article was trumpeting the "shared commitment to digital and human connection" that Pivotus had with an Australian credit union and bank in the Netherlands. It got me thinking about the creative possibilities of what may be in store for our industry in the future.
Let's Really Think Outside the Box
Much has been written about the forecasted changes in the banking industry, but let's really expand our minds. Perhaps brick and mortar, but more like portals in a Starbucks café where you plug your device in or use the Bank's to take care of all your banking needs.
After you are admitted to the cyber facility through a retinal scan, you "log in" by scanning the computer chip on your wrist over the device to assure cybersecurity. With cash virtually extinct from our society, transfers of money are all made electronically. There is no more "float," nor any need for the Federal Reserve to effect our payment system.
Fintech Marries Traditional Banking
The Fintechies realize that the traditional banking world is foreign to them and marry or partner up with more traditional banks in order to effectively and economically deliver their services.
The concept of "Amazon Banking," where products and services are delivered to you directly either electronically or to your home or business has taken the country by storm. Amazon Financial Services has morphed into the country's leading provider, dominating the payment system.
Everything is a Product
Everything from deposit accounts to traditional loans and mortgages is sold as a product. In-person meetings with bank representatives are charged by the hour. Comparison shopping can be done by Bankalo, the banking equivalent to Trivago. Pricing margins and differentials are perilously thin.
More Banking Consolidation - The Rise of the Credit Union
By 2050, we are down to 1,000 banks, with a similar number of prospering credit unions, with their special interest tax break, despite their total similarity to banks.
The Regulatory Schematic
The Federal Reserve and FDIC are finally limited to their primary functions of monetary policy and deposit insurance and the OCC, under its new auspicious as the FBC (Federal Banking Czar), has primary supervisory and examination authority over all 1,000 banks. The credit unions remain in their protective cocoon.
Examinations now are made totally remotely and electronically. Only a Skype-type exit meeting with boards of banks is required.
The Only Expansion is Our Imagination
Nominal new banks are formed (perhaps five per year) as consolidation leaves us with five mega banks, 20 regional banks, and the balance of community banks. In spite of the declining trend in banks, I believe that community banks serve a fundamental purpose in our economy and communities, especially for small businesses. I would like to imagine the regulators taking a more tolerant and inviting approach with new banks so that the industry can sustain a high level of service in the decades to come.